Backtests, Causality, And Model Risk In Quantitative Investing

CFA Institute Contributors5.65K FollowersFollow5ShareSavePlay(9min)CommentsSummaryQuantitative finance continues to debate the reliability and limits of model-driven investment strategies.Causal reasoning remains essential, but the relevant structure may itself include feedback between beliefs, flows, and outcomes.Association-based thinking retains an important role, especially under constraints of time and observability. peshkov/iStock via Getty Images By Igor Oliveira Quantitative finance continues to debate the reliability and limits of model-driven investment strategies. One central question is how much weight investors should place on backtesting.

In The Factor Mirage: How Quant Models GoThis article was written byCFA Institute Contributors5.65K FollowersFollowCFA Institute is a global community of more than 100,000 investment professionals working to build an investment industry where investors’ interests come first, financial markets function at their best, and economies grow.