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The quant, or quantitative analyst, is a financial professional who makes use of a mathematical approach to evaluating the current conditions in a trading market. As part of this evaluation, the quant will also employ the same general methods to individual investment opportunities within the market. The general concept is to make use of a numerical analysis in order to help an investor identify the most profitable purchases and sales to make within the market.
The work of an investment specialist that uses quantitative analysis as the basis for his or her findings will involve the detection of several different factors. First, the quant will seek to understand the current relationship between a given option and the overall current performance of the marketplace. By charting the data collected, it is possible to see in what ways the option is impacted by current market conditions and project how the option will perform if those conditions remain somewhat stable over the short term.
Next, the quant will often look for disparities in the performance of the investment option. By identifying instances in which the stock failed to perform according to expectations, it may be possible to identify future conditions where the stock can be purchased while in a slump, but with the anticipation that a drastic increase in value will shortly take place. Using numerical data to isolate this type of investment opportunity can lead to realizing a major return in a very short period of time.
In general, quants are all about effective risk management. The well trained quant understands that a numerical analysis can uncover a great deal of valuable information about the past, present, and future performance of a given option or the market as a whole. Because of this attention to detail, the quant provides investors with reliable data that can be used to either make a great deal of money or sidestep a deal that ultimately proves to be a failure.
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