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 …

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 …

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 …

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 …

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 …

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 …

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 …

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 …

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 …

Ed Thorp is a pioneer in the world of quantitative trading. He was one of the first people to use mathematics and statistics to develop trading systems and strategies. His work has been instrumental in developing the field of quantitative finance, and he is widely regarded as one of the …