Create math-based financial models to guide stock-trading decisions.
What does a Quantitative Analyst do?
The Beatles famously sang, “All you need is love.” If you’re a Quantitative Analyst, however, you’ll insist that all you need is mathematics. Because in your line of work, math reigns supreme.
In this position the Quantitative Analyst solves problems — specifically, financial problems — with statistics. Often called a “Quant,” for short, the Quantitative Analyst is a financial Engineer who’s hired by investment banks, hedge funds and other financial institutions to develop and implement quantitative models. Those models, which are abstract representations of financial decision-making scenarios, are used by investors to develop systematic strategies for trading stocks.
Remember in high school, when you asked your Calculus Teacher, “When will I ever have to use this?” Well, this is when. Although you’ll use software programs to build them, your financial models are based on sophisticated algorithms and complex mathematical principles.
To put those principles into practice, you study financial trends and patterns — looking for information about past asset prices, market returns, etc. — then enter the data into spreadsheets so it can be analyzed, summarized and visualized. Theoretically, the resulting model will assist investors with risk management and derivatives pricing by allowing them to predict a stock’s future performance based on its past.
Although you’re a math genius, you’re also a savvy financial strategist. For that reason, you don’t just churn out numbers; you also work closely with Equity Traders, often advising them on trades. Because investing is emotional, and Quants are logical, it’s your job to be the Trader’s brain, understanding that it’s math — not man — that ultimately controls the stock market.