Gareth Henry Explains The Origin And Spread Of Quantitative Investing
Gareth Henry borrows on the statistical research of Alex Foster the current VP at Quantiacs and author of “The Edge of Foresight” to depict the spread of quantitative investing. In the book, Foster argues that as much as 90 percent of the stock volumes in the United States is traded through quantum investing.
More importantly, it asserts that the absorption rate of the technology has hit above average rates with 6 of every 10 registered hedge funds in the country using one form of quantitative investing or another. But what if the origin of this trend and why the sudden bump in demand? Learn more about Gareth Henry at gazetteday.com
What is Quantitative investing?
According to Gareth Henry, Quantitative investing refers to the use of quantitative analysis in investing and making investment decisions. It is an evolution of the traditional Program trading that uses a combination of research and computer-generated data to predict stock performance and in effect making appropriate investment. Ideally, quant funds and traders use specifically designed programs to make investment decisions.
How does it work?
Gareth Henry mentions that quantitative investing tools are designed to consume and digest a range of market variables in coming up with an appropriate response. Quant traders and funds, therefore, feed these programs with all different variables acting on the price of a stock or value of a business such as asset prices, perceived consumer behavior, and trading volumes. The program, in turn, digests these variables and comes up with an estimated stock price.
Where is it applied?
The quantitative analysis models are hugely versatile. Gareth Henry, therefore, explains that they can be used and replicated in virtually every industry. You only need to have the right variables a programmer and quantitative analyses expert to tweak its coding in a manner that best suits your field of operation.
Why the sudden interest in the tools?
The sudden increase in the demand for quantitative investing tools is hugely dependent on their ability to generate rapid profits in short periods of time. Like the traditional traders, Gareth Henry believes that hedge funds and savvy individual investors are drawn to quantitative investing tools due to their ability to predict stock performances more accurately both in the short and long run.