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Information Coefficient
The information coefficient (IC) is a measure of the merit of a predicted value. In finance, the information coefficient is used as a performance metric for the predictive skill of a financial analyst. The information coefficient is close to correlation in that it can be seen to measure the linear relationship between two random variables, e.g. predicted stock returns Return may refer to: In business, economics, and finance * Return on investment (ROI), the financial gain after an expense. * Rate of return, the financial term for the profit or loss derived from an investment * Tax return, a blank document or t ... and the actualized returns. The information coefficient ranges from -1 to 1, with 0 denoting no linear relationship between predictions and actual values (poor forecasting skills) and 1 denoting a perfect linear relationship (good forecasting skills). Similarly, -1 reflects a negative linear relationship, i.e. the analyst always fails to make an accurate prediction ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of financial economics bridges the two). Finance activities take place in financial systems at various scopes, thus the field can be roughly divided into personal, corporate, and public finance. In a financial system, assets are bought, sold, or traded as financial instruments, such as currencies, loans, bonds, shares, stocks, options, futures, etc. Assets can also be banked, invested, and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities. A broad range of subfields within finance exist due to its wide scope. Asset, money, risk and investment management aim to maximize value and minimize volatility. Financial analysis is viability, stability, and profitability asse ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Analyst
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst.Financial Analysts Bureau of Labor StatisticsFinancial Analysts collegegrad.com The job title is a broad one: [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Correlation
In statistics, correlation or dependence is any statistical relationship, whether causal or not, between two random variables or bivariate data. Although in the broadest sense, "correlation" may indicate any type of association, in statistics it usually refers to the degree to which a pair of variables are ''linearly'' related. Familiar examples of dependent phenomena include the correlation between the height of parents and their offspring, and the correlation between the price of a good and the quantity the consumers are willing to purchase, as it is depicted in the so-called demand curve. Correlations are useful because they can indicate a predictive relationship that can be exploited in practice. For example, an electrical utility may produce less power on a mild day based on the correlation between electricity demand and weather. In this example, there is a causal relationship, because extreme weather causes people to use more electricity for heating or cooling. However ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Random Variable
A random variable (also called random quantity, aleatory variable, or stochastic variable) is a mathematical formalization of a quantity or object which depends on random events. It is a mapping or a function from possible outcomes (e.g., the possible upper sides of a flipped coin such as heads H and tails T) in a sample space (e.g., the set \) to a measurable space, often the real numbers (e.g., \ in which 1 corresponding to H and -1 corresponding to T). Informally, randomness typically represents some fundamental element of chance, such as in the roll of a dice; it may also represent uncertainty, such as measurement error. However, the interpretation of probability is philosophically complicated, and even in specific cases is not always straightforward. The purely mathematical analysis of random variables is independent of such interpretational difficulties, and can be based upon a rigorous axiomatic setup. In the formal mathematical language of measure theory, a random var ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rate Of Return
In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment, such as interest payments, coupons, cash dividends, stock dividends or the payoff from a derivative or structured product. It may be measured either in absolute terms (e.g., dollars) or as a percentage of the amount invested. The latter is also called the holding period return. A loss instead of a profit is described as a '' negative return'', assuming the amount invested is greater than zero. To compare returns over time periods of different lengths on an equal basis, it is useful to convert each return into a return over a period of time of a standard length. The result of the conversion is called the rate of return. Typically, the period of time is a year, in which case the rate of return is also called the annualized return, and the conversion process, described below ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Information Ratio
The information ratio measures and compares the active return of an investment (e.g., a security or portfolio) compared to a benchmark index relative to the volatility of the active return (also known as active risk or benchmark tracking risk). It is defined as the active return (the difference between the returns of the investment and the returns of the benchmark) divided by the tracking error (the standard deviation of the active return, i.e., the additional risk). It represents the additional amount of return that an investor receives per unit of increase in risk. The information ratio is simply the ratio of the active return of the portfolio divided by the tracking error of its return, with both components measured relative to the performance of the agreed-on benchmark. It is often used to gauge the skill of managers of mutual funds, hedge funds, etc. It measures the active return of the manager's portfolio divided by the amount of risk that the manager takes relative to the be ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
