Third Edition of Quantitative Investment Analysis, Fourth Edition provides an advanced teaching methodology, complete with worksheet and data collection tools. This text is intended for investors who are planning to enter the lucrative world of financial advising. It begins with a brief history of financial analysis and investment decision making and goes on to cover current issues related to institutional investment management. The book then delves into analysis techniques such as multiple regression analysis, time series analysis, meta-analysis, and case study method. The book concludes with a number of case studies that have been used successfully by financial planners to create investment policies.
What sets this third edition of Quantitative Investment Analysis apart from earlier editions is the wide range of topics it covers. The fourth edition includes a beginner’s guide to quantitative investment analysis, a beginner’s guide to financial economics, and case studies on fundamental analysis, alternative investments, quantitative economics, the bond market, commodities, cash markets, and stock markets. The book also includes a glossary of financial terms, a directory of stock exchange terms, and a glossary of economic terms. A well-designed internal page map accompanies the text that helps readers locate important information quickly. In addition, the editors have added new appendices that focus on risk management in energy stocks, fixed income securities, alternative assets, and other asset classes.
This book is ideal for those planning to enter the world of financial advising. The book provides the professional investor with the tools and guidance necessary for creating a robust portfolio management plan and effective risk management strategy. Much of the emphasis in the book is on emphasizing the importance of a solid risk management policy. The authors describe several risk management approaches and strategies that are designed to strengthen the portfolio’s link to various asset classes and segments. They also describe some of the best approaches to achieving desirable returns while minimizing the probability of losses.
Part one of the book describes the four primary types of quantitative investment analysis, as well as the key quantitative techniques used in each of these areas. Each chapter begins with an overview of the topic and the corresponding technical report. The next two chapters describe risk management and its role in the investment process and describe alternative investment strategies. The last chapter presents a review of the general approach to quantitative methods and the current state of the art. The fourth chapter briefly reviews the material from the previous edition and again presents the current state of the art.
The primary focus of the book is on the design of a robust quantitative investment analysis workbook. This section contains practice problems and a set of guidelines for designing effective portfolio management policies. The section on risk management explains risk management techniques such as cost basis, unconditional discounting, and the use of other statistical methods. The discussions about alternative portfolio strategies describe strategies that are consistent with the investment objectives of the investors. These include the use of hybrid instruments, diversification across asset classes, and the use of financial futures or options contracts to hedge exposure to certain market risks.
The book contains numerous exercises and a glossary of financial terms. It is revised and updated with a new chapter on real-world application of quantitative methods and a fourth chapter on machine learning and optimization. Machine learning refers to algorithms for optimizing investment portfolio choices using large databases of past performance data. The fourth chapter updates the content from the third and fourth edition with new topics on macroprudential management, nontraditional portfolio strategies, quantitative measures of risk and financial futures.