Our glossary provides a collection of terms and definitions from the world of risk management, financial analysis, and algorithmic trading strategies. Explore the most important concepts and their meanings.
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Alpha (α):
The excess return of a portfolio compared to a market index. Alpha measures an investor's ability to outperform the market.
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Beta (β):
A measure of the volatility or systematic risk of a security compared to the overall market.
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Tail Risk:
The risk of extreme losses that lie far outside the normal probability distribution of a portfolio.
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Relative Strength (RS):
An indicator that measures the performance of an asset compared to other assets or an index.
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Equity Risk On/Off Filter (ERooF):
An iQquant tool used to identify market phases where it is safer to invest in equities ("Risk On") or better to act defensively ("Risk Off").
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Pattern Recognition:
The use of algorithms to identify recurring patterns in financial data to optimize investment decisions.
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Sharpe Ratio:
A measure of an investment's risk-return profile, calculated by dividing the difference between its return and the risk-free rate by its volatility.
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Black Swan Event:
An unexpected and rare event that has significant impacts on financial markets.