What is quantitative analysis and how is it used in finance?

What is quantitative analysis and how is it used in finance?

Quantitative analysis involves using mathematical and statistical methods to evaluate financial data. It's used to identify trends, assess risks, and make investment decisions.

Can you give me an example of a quantitative analysis model?

Sure! One common model is the Capital Asset Pricing Model (CAPM), which calculates the expected return on an investment based on its risk compared to the market.

What tools do analysts use for quantitative analysis?

Analysts often use software like R, Python, MATLAB, and Excel for data analysis, along with statistical packages for modeling.

How does quantitative analysis differ from qualitative analysis?

Quantitative analysis focuses on numerical data and statistical methods, while qualitative analysis examines non-numerical factors like market sentiment.

What are the limitations of quantitative analysis?

Limitations include reliance on historical data, potential for model risk, and the inability to capture qualitative factors.