Blogs

Sector Rotation Strategy

I. Introduction Sector Rotation is an asset allocation strategy which posits that certain sectors outperform others in different stages of the business cycle, and that the market can be outperformed by rotating a portfolio’s sector allocation based on the current phase of the business cycle. The sector rotation model has been around for decades, but [...]

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Random Walks

Introduction The random walk hypothesis states that stock market prices evolve according to a stochastic process, preventing the prediction of future stock market movements.  The concept follows from the weak version of the efficient-market hypothesis, which asserts that future stock market movements are not correlated with past movements.  In other words, the movement of share [...]

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Unemployment Rate and Stock Market Returns

The unemployment rate is generally considered to be a lagging countercyclical economic indicator. To better understand this indicator, we are going to use Palantir Finance to recreate a study by the CXO Advisory Group that analyzes the relationship between changes in the unemployment rate and the future returns of the S&P 500. This workflow assumes [...]

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Taylor Rule

The Taylor rule is a method for determining how much the Fed should raise or lower rates based on inflation and the difference between real and potential GDP (also known as the output gap). The underlying premise is that the Fed raises interest rates to curb high inflation and lowers interest rates to spur a [...]

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