Geographies and asset classes continue to become more interconnected. Add to this the rapid increase in available data, and the result is rising financial market complexity that makes alpha generation more challenging for asset managers and traders. QI has brought together technologies and techniques that are now mature enough to provide unprecedented insights into the valuations of market securities and the underlying dynamics of financial markets.
Investment research has been largely based on subjective opinion. However, the confluence of processing power, data science, mathematics and domain expertise now allow us to derive surprisingly precise answers to the most fundamental questions in financial market investing:
Given available information, what is the objective fair valuation of a market security?
What drives the price?
Where are the largest valuation gaps and trade opportunities?
QI’s coverage of financial markets is comprehensive, encompassing both equity indices and single stocks, currencies, rates, commodities, credit and volatility markets. Both directional and relative value approaches are included, as are emerging markets. QI’s analytics are easily accessible over the web, and also through clear reports and live intraday notifications. The technology is kept firmly in the background.
Identify Profitable Opportunities
QIs valuation framework helps to identify investment opportunities. Large amounts of relevant macro and market data are updated continuously and over 4,000 instruments are scanned in real time. The largest valuation gaps are revealed throughout the day. This analysis, combined with your own filters, allows identification of opportunities that would most likely be otherwise missed.
Assess Impact of Shock Instantly
Identify the most likely market response to shocks and changes in key macro information. For example, if China devalues its currency which equity indices will perform best/worst? If oil prices fall, which currencies will be most affected? If the Fed raises rates which stocks are most likely to outperform?
Understand Market Behavior & Identity Regimes
Investors tend to focus on a small number of macro factors, or themes, which can drive markets for long periods of time. The macro “regime” for a security describes the small set of themes driving global markets. For example, there have been long periods in recent years where equity markets have been driven by monetary policy/QE, or where rates have been trading primarily off shifts in inflation expectations and credit spreads rather than economic growth. QI identifies the shifting associations under the surface and to keep you updated on the current regime.
Overall Exposure of your Portfolio to Macro Factors
QI analytics can reveal the macro forces that dominate your overall portfolio, enabling you to check that overall portfolio level exposure is aligned with your macro views. It is not necessary for QI to know any portfolio details – all we need is one time series in order to strip out the sensitivity of your portfolio to each key macro driver. These drivers include growth, inflation, energy prices, credit spreads, risk aversion measures and monetary policy settings among others. QI can conduct bespoke analysis to measure exposures to specific factors that you may want to focus on. This provides the significant advantage of taking your risk management beyond the limitations of correlation analysis which can be misleading when risk factors are correlated – please contact us to discuss how we can help
Avoid Trade Selection Errors
Asset managers conduct extensive research and formulate macro views. However, converting those views into specific, profitable trades can be less than straightforward. QI identifies precise, quantitative relationships between securities and macro drivers, enabling the asset manager to maximise the likelihood that if their view is correct, then the associated trade will be profitable.
Facilitate Access to New Markets
Investing in new markets and sectors without extensive prior experience is often challenging. QI levels the playing field by providing a comprehensive understanding of what drives them and an instant assessment of current valuations
Optimise Trade Timing
Once an investment decision has been made, the exact timing of entry can be refined and optimised by reference to QI’s valuation gap, providing additional edge to the investment. QI can scan any set of market instruments and notify when a suitable entry opportunity arises.