[Verse 1] When passive funds just track the index line Active managers seek to outshine They use math models and quantitative ways To beat the market through strategic plays Factor investing is where we start Finding patterns that set returns apart [Chorus] Quant approaches, numbers guide the way Factor models help us find the play Statistical arb, mean reversion too Mathematical models see us through Active management with a data-driven heart That's where quantitative strategies start [Verse 2] Value factors look for bargain stocks Momentum rides the trends around the clock Quality companies with strong balance sheets Size effects where small caps compete Multi-factor models combine them all Risk-adjusted returns standing tall [Chorus] Quant approaches, numbers guide the way Factor models help us find the play Statistical arb, mean reversion too Mathematical models see us through Active management with a data-driven heart That's where quantitative strategies start [Bridge] Statistical arbitrage finds the spread When prices drift from where models said Pairs trading brings them back in line Mean reversion works over time Risk management keeps losses small While alpha generation conquers all [Verse 3] Back-testing validates our trading rules Historical data provides the tools But be aware of over-fitting risk When models fail, returns get brisk Transaction costs can eat your gains Smart execution is what remains [Chorus] Quant approaches, numbers guide the way Factor models help us find the play Statistical arb, mean reversion too Mathematical models see us through Active management with a data-driven heart That's where quantitative strategies start [Outro] From factors to stats and models so bright Quantitative methods shed market light CFA knowledge helps you understand How math and finance go hand in hand
← Smart Beta and Factor Investing | Currency Management Basics →