Education: Terminology
Terminology
- Market Neutral Portfolio
A portfolio that seeks to avoid exposure to the overall market direction by holding an equal dollar weight of long and short securities. A market neutral portfolio aims to generate a positive spread between the return of the long portfolio and the return of the short portfolio.
- Beta
A measure of an asset's sensitivity to an underlying index. Stocks with betas higher than 1.0 have been more volatile than the index; stocks with betas lower than 1.0 have been less volatile than the index. An investor that believes that low beta stocks will outperform high beta stocks will be well suited to invest in QuantShares Market Neutral Anti-Beta Fund (BTAL).
- Exchange Traded Funds (ETFs)
A basket of stocks that are designed to track the performance of a particular index. ETFs trade like stocks on an exchange throughout the day and experience price changes throughout the day as they are bought and sold.
- Equal Weighted Positions
A portfolio that holds the same exposure to each stock within that portfolio. A portfolio with 100 stocks would have a 1% weight for each stock.
- Factor
A signal, attribute, or any variable which correlates with past stock returns and is expected to be correlated with future stock returns. Factors exhibit relationships with stock returns that not only are stable and persistent over time but also have a basis for driving future returns.
- Long Position
Purchasing a stock with the expectation that it is going to rise in value.
- Price Momentum
Price momentum investing is based upon the theory that stocks that have outperformed the overall market in the past will continue to outperform the market in the future. An investor who believes in this strategy would be suited to invest in QuantShares Market Neutral Momentum Fund (MOM).
- Passive Management
A portfolio management style that seeks to match the composition and characteristics, as well as the associated performance, of a selected index.
- Sector Neutral Portfolio
A portfolio that seeks to avoid exposure to any individual sector by holding an equal weight of long and short securities within each sector.
- Short Selling
A strategy whereby a portfolio manager sells stock with the expectation of profiting by buying it back later at a lower price.
- Spread Return
The return earned between the long and short portfolios within each ETF.
- Tracking Error
A measure of how closely a portfolio follows the index to which it is benchmarked.
Financial Ratios
- 30 Day SEC Yield
Standardized yield calculated by taking the interest each share in the fund earns for a 30 day period and subtracting all expenses and sales charges.
- Book to Price
A ratio that compares a stocks book value to its market value. It is calculated by dividing the latest quarter's book value per share by the current closing price of the stock. This ratio represents 1/3 of the criteria used in ranking stocks for selection in the QuantShares Market Neutral Value Fund (CHEP).
- Cash Flow from Operations to Price
A ratio that compares the cash flow of a company generated from its operation to its share price. Used to evaluate the amount of available cash a company has to pay off its current liabilities. This ratio represents 1/3 of the criteria used in ranking stocks for selection in the QuantShares Market Neutral Value Fund.(CHEP)
- Mean Forward Earnings to Price
A measure of the price-to-earnings ratio (P/E) using forecasted earnings. Calculated as market price per share divided by expected earnings per share. This ratio represents 1/3 of the criteria used in ranking stocks for selection in the QuantShares Market Neutral Value Fund (CHEP).
- Price to earnings Ratio
A valuation of a company's share price compared to its per-share earnings.