Factor-based, quantitative analysis (QA) is a methodology that seeks to understand and predict behavior by using mathematical and statistical modeling. In the investment management industry, QA is used to analyze investment opportunities to provide predictions of when to purchase or sell securities, and the potential magnitude of a move. The input factors, or independent variables, that are fed into a factor-based quantitative model include financial ratios such as price-earnings ratio (P/E), earnings growth, revenue growth, return on equity, profit margin, cash flow, among others.
What is factor-based quantitative analysis?
Factor-based, quantitative analysis (QA) is a methodology that seeks to understand and predict behavior by using mathematical and statistical modeling. In the investment management industry, QA is used to analyze investment opportunities to provide predictions of when to purchase or sell securities, and the potential magnitude of a move. The input factors, or independent variables, that are fed into a factor-based quantitative model include financial ratios such as price-earnings ratio (P/E), earnings growth, revenue growth, return on equity, profit margin, cash flow, among others.