Navigating momentum crashes using the first- and second-order derivatives of the momentum factor
In the complex world of investing, it's essential to navigate effectively and avoid potential pitfalls. Introducing our latest report, a deep dive into the power of Momentum Inflection Factor, a new approach to momentum investing that could redefine your strategies.
Investors frequently pursue tactics that leverage current trends, with momentum investing standing out as a popular method. Nevertheless, beneath the promise of profits lies a widely recognized risk—the occurrence of "momentum crashes." For instance, if an individual had invested in the long-short momentum strategy prior to the 2008 global financial crisis, their initial capital might still not have been fully recuperated.
In this report, we present the concept of the momentum inflection factor as a means to mitigate the risk of a "momentum crash." The momentum inflection factor examines both the first-order (momentum velocity) and second-order (momentum acceleration or momentum deceleration) alterations in momentum, employing them as a signaling mechanism.
What's inside
A thorough examination of the concept of Momentum Inflection Factor.
An analysis of how Momentum Inflection Factor can help avoid "momentum crashes".
Real-world examples demonstrating the effectiveness of this approach in safeguarding investments.
