Using the Number of Confirmed Covid Cases as a Sentiment Indicator

Posted on January 26, 2022 By Harbourfront Technologies

Covid-19, the novel coronavirus, has been a source of anxiety for markets and individuals around the world since its outbreak in December 2019. Many traders have been looking for ways to use the information on the spread of the virus to predict market movements. While there are indicators that can …

Do Hedge Funds Add Value?

Posted on January 23, 2022 By Harbourfront Technologies

Despite the growing popularity of passive investing, active hedge fund managers are still adding value to their investors’ portfolios. While passively managed funds can be a great option for some investors, active management can provide added benefits for those who are looking for better risk-adjusted returns and diversification, especially during …

Sales and Purchase Agreement

Posted on January 21, 2022 By Harbourfront Technologies

Financial transactions are the essence of a business. These transactions allow companies and other entities to acquire products or services. Once they do so, they can resell them to generate profits. While most transactions are straightforward, they may also require a legal form. For that purpose, sales and purchase agreements …

Using Machine Learning to Predict Market Volatility

Posted on January 20, 2022 By Harbourfront Technologies

The unpredictability of the markets is a well-known fact. Despite this, many traders and portfolio managers continue to try to predict market volatility and manage their risks accordingly. Usually, econometric models such as GARCH are used to forecast market volatility. In recent years, machine learning has been shown to be …

Can Options Volume Predict Market Returns?

Posted on January 17, 2022 By Harbourfront Technologies

Most of the research in equity and index options has been devoted to volatility and the volatility risk premium. Relatively less attention is paid to options volume. To tackle this issue, article examined options volume from the perspective of in-the-money options order imbalance. It showed that the public directional …

Can Credit Growth and The Yield Curve Predict Financial Crises?

Posted on January 14, 2022 By Harbourfront Technologies

We have discussed how the volatility index, VIX, and the yield curve can be used to predict recessions. On a similar topic, a recent paper argued that machine learning models are outperforming logistic regression when it comes to predicting financial crises. It explored the reasons behind this and showed …

Predicting Recessions Using The Volatility Index And The Yield Curve

Posted on January 11, 2022 By Harbourfront Technologies

The yield curve is a graphical representation of the relationship between the yields of bonds with different maturities. The yield curve has been inverted before every recession in the United States since 1971, so it is often used as a predictor of recessions. Indeed, the spread between the long-term and …

Mean-Reverting Process in Real Option Valuation

Posted on January 7, 2022 By Harbourfront Technologies

What does the mean reversion of asset price have to do with options pricing? We have explored this topic previously for financial options. However, the mean-reverting property of an asset affects not only the values of financial options but also real options. A real option is the right – but …

Can a Complex Trading System Be Profitable?

Posted on January 4, 2022 By Harbourfront Technologies

A trading system is a set of rules that a trader uses to make buy and sell decisions. It’s commonly believed that a profitable trading system should be simple, with few parameters, so that it can be easily understood and followed. It is also important for the system to be …

Valuation Adjustment Mechanism (VAM): Definition, Agreement, Example, Usage

Posted on January 3, 2022 By Harbourfront Technologies

The term mergers and acquisitions (M&A) refers to the consolidation of companies through financial transactions. This process involves one company acquiring another company’s shares. Several terms and conditions may apply to these transactions. However, these terms may differ from one market to another. The valuation adjustment mechanism is unique to …