Portfolio of Risk-Free and Risky Assets An investor’s portfolio improves if a risk-free asset is added to the mix. In other words, a combination of the risk-free asset and a risky asset can result in a better risk–return trade-off than an investment in only one type of asset because the risk-free asset has zero correlation…
Zipline and PyFolio abstract away the complexities of the backtesting and performance/risk analysis aspects of algorithmic trading strategies. Backtesting should include all relevant factors, such as slippage and trading costs. Zipline is one of the most advanced open source Python libraries for algorithmic trading backtesting engines. PyFolio is an open-source Python performance and risk analysis…
Exploring the yahoofinancials Python library The yahoofinancials Python library provides free access to the market data available from Yahoo Finance, whose provider is ICE Data Services. It provides access to historical and, for most assets, also real-time pricing data for the following: Single-ticker retrieval Convert the nested JSON to a pandas’ DataFrame Real-time data retrieval…
Cryptocurrency investment is typically viewed as an alternative asset. As digital assets increase in prominence, some institutional investors selectively seek exposure to these assets for their potential higher returns and possible diversification benefits. When institutional investors become more comfortable with investing in digital assets, it may be a very early indication that the market may…
Distributed ledger technology (DLT) based on a distributed ledger (defined later) represents a technological development and offers potential improvements to delivering financing services and financial record keeping. DLT networks are being considered as a means to create, exchange, and track ownership of financial assets on a peer-to-peer (P2P) basis. Potential benefits of using this technology include…
Some specific sources of alpha are the manager skills in specific stock selection and utilising higher-return strategies that minimise risks. The performance of hedge funds can be attributed to three distinct sources: Hedge Fund Investment Risks and Returns
Hedge funds, like private equity funds, are legally typically incorporated and organised as private limited partnerships or limited liability companies with a general partner or managing member who is the hedge fund manager. The partnership or the managing member receives a management fee, and the general partner receives compensation based on fund performance. Hedge fund…
Hedge funds normally apply common principles that seemingly increase portfolio risk, such as borrowing money to invest, using leverage (derivatives), and short selling. On their own, they do not hedge risky positions against a market move; on the contrary, they seem to amplify the risks. It may seem like the name hedge funds is a misnomer. Hedge…
