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The Pursuit of Edge | Savvy Investor

The Pursuit of Edge

In our most recent guest blog for the Quant Conference, we discussed ‘The Evolution of Quant Strategies.’ In that piece, Andrew Perrins, CEO of Savvy Investor, argued that, “the pursuit of statistical edge was one of the raisons d'être for today’s quant researcher”.

Following up on this theme, Andrew examines the pursuit of edge as it applies to financial markets. He observes statistical traits in both the sporting and financial world and how the recent effects of Covid-19 may have implications for financial market data sets.

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Forget the Beatles: Quants Reign in Liverpool

Liverpool Football Club have everything going for them. Led by a well-respected head coach in Jurgen Klopp, a proponent of ‘heavy metal football’, and possessing a superstar player in ‘The Egyptian King’, Mo Salah, they are the reigning champions of Europe and World Club Champions. In the current season of the English Premier League, they’ve so far* racked up 82 points from a possible 87 — a success rate of 94.3%.

For our US readers familiar with the NBA, Liverpool are beginning to look just as good, if not better than the Chicago Bulls team of the early 1990s. Chicago’s head coach, Phil Jackson was a practitioner of the enigmatic ‘triangle offense’ and the team was built around arguably the best player of all-time, Michael ‘Air’ Jordan. The Bulls dominated the NBA in the nineties winning six NBA Championships and set a league record of 87.8% wins in the 1996 regular season.

Looking at Chicago and Liverpool in simple terms, we can observe two successful traits:

1. A star player.

2. A respected head coach with a unique style or strategy for playing the game.