Hedge Fund MathematicsSubscribe
I'm currently working in ER but would like to move to HF as I feel that I have more interest in PM rather than research.
As some of my colleagues has commented and I have searched on WSO and find that various quant skills are a plus for HF. Coming from a Physics major, I have no problem with algebra or calculus. However, what "specific" mathematics are important to say a long/short equity or a market neutral HF, eg. hypothesis testing? normal distribution? probability? Regression? Non-linear equations or calculus?
Hedge Fund Math
The type of math you will regularly use, in Hedge Funds, depends heavily on what kind of fund you are dealing with.
User @DeepLearning - Hedge Fund - Equity Hedge - Quant agrees:
Depends on the type of hedge fund. Machine Learning, Statistics, Time Series, Markov Models are all used heavily. Also just straight up linear regressions with regularization, coefficient constraints, etc. is used heavily.
For quantitative hedge funds, good, useful and clean data is usually more powerful than having a more sophisticated model. While quantitative hedge funds do use a good amount of advanced mathematics, they spend probably more effort in data collection/cleaning.
If you are using a unique and useful data but only performing basic regression techniques, you are probably going to get better performance than a fund that is using non-unique (but still useful) data but using sophisticated models.
Many PhD mathematicians are surprised to find that they spend most of their time applying undergraduate mathematics in creative ways rather than using the full extent of their graduate math knowledge.
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