Data Science in Hedge Fund

Hi,

I was wondering if anyone has any experience working as a data scientist in a hedge fund? I have a data science background, but currently work in equity research. My aim is to combine these two skillsets to become a hedge fund analyst. 

I want to do some side projects similar to what data scientists do in hedge funds in order to hone my skills. What are the key languages/technologies you use? What does a typical project look like? What would you focus on learning? What would be some good side project ideas be? 

Any input at all is extremely helpful, however irrelevant you think it may be. 

Thanks in advance, I would really appreciate any input!

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Comments (13)

Nov 10, 2020 - 2:46pm

Almost nobody wants this combo of skills. 
it's a good product but there's no market for it sadly 

best bet is being more quanty - they have more tolerance for weirdos 

a fundamental pm won't understand what you are doing or care 

There might be exceptions here and there but good luck finding them - they are rare. I'm sure people will tell me I'm wrong but feel free to mention even 1 prominent exception to what I'm saying. 

Nov 10, 2020 - 4:23pm

Two different routes. The closest you can get to is a fund that believes in a quant overlay to single stock picking. But then that fund will have separate quant PM/strategist and fundamental PM. Fundamental PMs will not care about what statistical model the quant strategist used, as long as they tell the fundamental PM what (s)he should do with the single stock positions or overweight / underweight certain sector / factor / asset class. Quant PM will not have looked at a single financial statement in his/her life. 

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  • Works at Citadel Investment Group
Nov 10, 2020 - 5:13pm

When I was interviewing out of grad school I did a couple interviews for data science roles at asset managers (not hedge funds), and the vibe I got was that they were there mostly to support the discretionary decision makers, ie here's a bunch of data, here's a hypothesis I have, figure out whether or not the data supports that or if not, what is the data saying.

I agree with some posters above who say that it's a better career path to either go more or less quant. What I mean is either try and specialize more and go into a fully systematic fund (I assume this is doable from a data science role but not sure - if it isn't you could consider an MFE type degree and then transitioning to the buyside afterwards). Personally, I chose to go the other way, and now trade fixed income instruments at a hedge fund. While I still use some programming / math in my day-to-day, it's much less than a data science role.

When I say a "better" career path, I mean that in those cases you would have a route to a role tied to P&L - this isn't necessarily better for everybody. The data science type roles at asset managers are still great careers, and I would bet that they are not too difficult to transition to from your position. Feel free to DM if you have more questions--for reference, my background is 2 years of trading at a bank -> MFE type program -> hedge fund.

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Nov 11, 2020 - 11:07pm

interesting...i was a desk analyst at a bank for a few years (lots of excel and VBA back in the day) and then traded rates for a few years and did "ok" (made 10mm trading US rates my last year on a tight leash, then got pushed out because of politics...my former boss didn't respect me ans when they needed to cut headcout, i was out...to be fair, i was young and immature back then, but feels like i've been blackballed).  I've taken a number of years away from markets and want to get back into it, but can't seem to even get an interview when the rare seat opens up that i feel i'm qualified for (my old boss is still a desk head at a bank and has been around for a long time).

i have 2 strategies

1) rates RV in the long end 10-30yr curve and fly stuff (not as much opportunity these days vs pre-2008)

2) semi-systematic outright direction of long rates based on pattern recognition of 10yr note futures (mostly intraday stuff)

i haven't traded in a number of years, but am looking to get back into it, but can't even get an interview for an institutional seat.

any advice?

just google it...you're welcome
  • 2
  • Works at Citadel Investment Group
Nov 12, 2020 - 12:35am

Depending on your age, you could always try going back to grad school for an MFE type degree if you have the background, and trying to make the switch to the buyside from there. When I was in grad school, the oldest member of my class was 34, and he successfully made the jump from a risk management role at a bank to a hedge fund (he did have a PhD in applied math), so there are some older candidates.

Other than that, again depending on your age, you might consider looking into junior level roles (entry level or just above) at a small fund or trading firm, if you'd be willing to do that. I say small fund or trading firm because larger, established funds tend to have recruiting pipelines either directly from undergrad or grad school or from banks/other funds, while smaller firms tend to be more open to unorthodox candidates.

To be honest, I think it would be difficult to transition directly to a risk-taking role having taken several years off from trading without taking some intermediate step in the middle. From my (pretty limited) number of years in the industry, the market tends to evolve quickly, and those who are able to stick around are constantly adapting with it.

Nov 19, 2021 - 5:10am

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