Quantitative analysis (finance)

Quantitative analysis in finance refers to the application of mathematical and statistical methods to problems in financial markets and investment management. Professionals in this field are known as quantitative analysts or quants.

Quants typically specialize in areas such as derivative structuring and pricing, risk management, portfolio management, and other finance-related activities. The role is analogous to that of specialists in industrial mathematics working in non-financial industries.

Quantitative analysis often involves examining large datasets to identify patterns, such as correlations among liquid assets or price dynamics, including strategies based on trend following or mean reversion.

Although the original quantitative analysts were "sell side quants" from market making firms, concerned with derivatives pricing and risk management, the meaning of the term has expanded over time to include those individuals involved in almost any application of mathematical finance, including the buy side. Applied quantitative analysis is commonly associated with quantitative investment management which includes a variety of methods such as statistical arbitrage, algorithmic trading, and electronic trading.

Some of the larger investment managers using quantitative analysis include Renaissance Technologies, Citadel Securities, D. E. Shaw & Co., and AQR Capital Management.

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