![]() Rather than consider each transaction in isolation, the firm’s portfolio optimization software is designed to account for complex interrelationships among a large set of financial instruments that may range over a number of different asset classes. The firm’s proprietary optimization technology was designed with the objective of maximizing expected return while controlling the aggregate risk associated with a portfolio that may in some cases include simultaneous positions in several thousand securities. When this analytical process yields a new model the firm believes to be of predictive value, it becomes eligible for deployment within one or more trading strategies, in some cases along with a dozen or more other models involving some of the same financial instruments, but arising from different market anomalies. Data is obtained from many countries throughout the world, and covers a wide range of asset classes. Shaw group analyzes an enormous amount of data associated with tens of thousands of financial instruments, along with various factors not associated with any one such instrument. In the course of identifying profit opportunities, the D. the utilization of proprietary optimization technology to construct dynamically evolving investment portfolios based on these profit opportunities, risk factors, and transaction costs.the use of quantitative techniques to minimize the transaction costs associated with the purchase and sale of securities and. ![]() the application of proprietary models designed to measure and control various forms of risk.the use of mathematical techniques to identify profit opportunities arising from subtle anomalies affecting the prices of various securities.Strategies: “The firm’s quantitative strategies are for the most part based on: Its activities range from the deployment of investment strategies based on either mathematical models or human expertise to the acquisition of existing companies and the financing or development of new ones.” ShawĮmployees/Size: 1,100/approximately $26 billion in investment capital (as of March 1, 2012)ĭescription: “The firm has a significant presence in many of the world’s capital markets, investing in a wide range of companies and financial instruments within both the major industrialized nations and a number of emerging markets. (NOTE: All information is taken from company websites unless otherwise indicated.) D.E. As a result, many quant trading strategies have been moving and likely will continue to move from internal trading desks at the banks to banks’ asset management arms. However, with the implementation of the Volcker Rule, banks are limited in the types of investment activities they can engage in. Many large banks do, via proprietary trading divisions. Consider Highbridge Capital Management, a $29B “diversified investment platform comprising hedge funds, traditional investment management products, and credit and equity investments with longer-term holding periods.” Among other strategies, Highbridge offers Convertible Bond Arbitrage and Statistical Arbitrage funds, which are typically thought of as more quantitative strategies than some of their other product offerings, which include credit and global macro investments.Īdditionally, keep in mind that firms other than Hedge Funds run quantitative trading strategies. For example, many multi-strategy hedge funds, while not typically known as Quant Hedge Funds, have significant quantitative strategies that they run as part of their platform. However, there are several prominent Quant Hedge Funds that have had a significant track record, and while longevity is no guarantee of future staying power, these firms are considered leaders in the Quant Hedge Fund space: New Hedge Funds are being established on a daily basis (and often, it seems, are shuttered equally quickly).
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