Forecasting Credit Indices: Which Models Are Stable?

Posted on October 10, 2023 By Harbourfront Technologies

Credit indices are financial instruments used to gauge the overall creditworthiness and risk of a particular market or sector. These indices provide investors with a snapshot of credit risk within a specific market, allowing them to assess the health and stability of that market. There are two prevalent categories of …

Anchoring Bias and Mean Reversion: A Duo in Stock Price Dynamics

Posted on October 6, 2023 By Harbourfront Technologies

Mean reversion in the financial market is a concept that suggests that asset prices tend to fluctuate around their long-term average or mean over time. When prices deviate significantly from this mean, they are expected to revert back to it. This phenomenon is often driven by market forces such as …

Using Box Spread to Determine Implied Dividend and Risk-free Rate Simultaneously

Posted on October 2, 2023 By Harbourfront Technologies

Dividends are a fundamental component of many investment strategies and a crucial aspect of equity ownership. They represent a portion of a company’s profits that is distributed to its shareholders, typically on a regular basis, such as quarterly or annually. Dividends are an input in the pricing model for equity …

What Influences Stock-Bond Correlation?

Posted on September 27, 2023 By Harbourfront Technologies

The correlation between stocks and bonds plays a crucial role in portfolio allocation and diversification strategies. This correlation measures the degree to which the returns of these two asset classes move in relation to each other. When stocks and bonds exhibit a negative correlation, it implies that they tend to …

Pricing Asian Options on Low-Volatility Assets: Problem and Solution

Posted on September 24, 2023 By Harbourfront Technologies

An Asian option is a type of financial derivative contract commonly used in the world of finance. What sets it apart from traditional options, such as European or American options, is its unique method of calculating the payoff. Rather than being determined solely by the underlying asset’s price at the …

Can Big Data and AI Replace Human Fund Managers?

Posted on September 20, 2023 By Harbourfront Technologies

The integration of alternative data in finance has ushered in a transformative era, where traditional financial analysis is augmented by vast and unconventional datasets. These alternative data sources encompass a myriad of information, from satellite imagery tracking global supply chains to sentiment analysis of social media chatter. By leveraging big …

Technical Trading in the US Equity Index Market

Posted on September 16, 2023 By Harbourfront Technologies

Technical trading is a method of evaluating and making trading decisions based on the historical price and volume patterns of a security or financial instrument. It operates on the premise that past price movements and trading activity can provide insights into future market behavior. Practitioners of technical trading use a …

How Generative AI Will Change the Online Labor Market

Posted on September 13, 2023 By Harbourfront Technologies

ChatGPT is an advanced AI language model developed by OpenAI, designed for natural language processing tasks and human-like text-based conversations. It’s powered by the GPT-3.5 architecture, known for its ability to understand and generate human-like text across a wide range of topics. ChatGPT has applications in chatbots, virtual assistants, content …

Are Stop-Loss Orders Effective in the Cryptocurrency Market?

Posted on September 8, 2023 By Harbourfront Technologies

Stop-loss orders are trading directives utilized to preset a price point at which a trade should be automatically closed. Traders use these orders to define a specific exit level for their positions, which is activated if the market price reaches or surpasses this pre-established point. Essentially, stop-loss orders serve as …

Using Multivariate Functional False Discovery Rate for Testing System Robustness

Posted on September 4, 2023 By Harbourfront Technologies

Data snooping bias is a prevalent challenge in finance, stemming from the extensive exploration of historical financial data to uncover trading strategies and patterns. It occurs when researchers or traders test numerous hypotheses and strategies on historical data until they discover one that appears profitable purely by chance. This process, …