Investors utilize a variety of performance and risk metrics to evaluate strategies. These numbers provide a summary of what happened to the strategy historically and can be useful to quickly compare different strategies. To use these statistics effectively, it is helpful to look at some of the nuances of those frequently cited and cases where the information they provide could be misleading. Many of the common metrics can be classified in ways that are similar to quantities we use to describe the world around us: temperature, speed, weight, voltage, etc. These classifications add context to what is being described based on how it is calculated and the information it contains. In finance, one typical summary statistic is the annualized return […]Read more ›
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