What does a Quantitative Analyst do?

Sara Schmidt
Sara Schmidt

A quantitative analyst is a person who works with quantitative finance, using various techniques in a multitude of settings. Also known as a "quant" in the investment industry, this analyst may work in derivatives pricing, risk management, or many other financing positions that involve mathematics. This career began in United States during the 1930s when investors started using mathematical equations to set prices and manage stocks and bonds.

A quantitative analyst works with quantitative finance in the business world.
A quantitative analyst works with quantitative finance in the business world.

Someone interested in quantitative analyst jobs may consider majoring in physics or other mathematical studies in college. Computer programming is another area in which quants typically enter. Engineering is another skill that is useful in quantitative finance.

While some quants deal with statistical models, others work on mathematical models.
While some quants deal with statistical models, others work on mathematical models.

The demand for qualified analysts has risen so high that new PhD programs have been created within many business schools to accommodate the growing need. A number of master studies areas are available for students seeking quantitative analyst jobs, including financial engineering, mathematical trading and finance, computational finance, mathematical finance and other areas. While these programs are considered in-depth, and generally more narrow in terms of master coursework in business studies, they typically take only a single year to complete.

There are generally two main types of quantitative analysts. While some quants deal with statistical models, others work on mathematical models. Since both of these areas require a large set of skills and expertise, it is rare that a quantitative analyst will be skilled at both.

In the banking industry, quantitative analysts support sales functions and trading by developing models that manage stocks and bonds. This provides the bank with a solution to problems with market prices and other issues. To develop such models, today's quants often utilize alpha generation platforms. These are software programs that use an automated algorithmic system that allows a quant to analyze many different strategies and solutions all at once.

Sara Schmidt
Sara Schmidt

A graduate of Southeast Missouri State University, Sara has a Master’s Degree in English, which she puts to use writing for wiseGEEK and several magazines, websites, and nonprofit organizations. She has published her own novella, and has other literary projects currently in progress. Sara’s varied interests have also led her to teach children in Spain, tutor college students, run CPR and first aid classes, and organize student retreats.

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Discussion Comments

Ceptorbi

@SimpleByte - Several types of companies hire quantitative analysts including hedge funds, insurance companies, and commercial and investment banks. Financial software companies also hire this type of analyst.

SimpleByte

What types of companies hire quantitative analysts?

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