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Giuseppe Paleologo - Multi-Manager Hedge Funds & Thinking Deeply About Simple Things (S7E11)

Flirting with Models

CHAPTER

Navigating Factor Models in Finance

This chapter explores the complexities of factor research in finance, emphasizing the importance of using characteristics over return data for more accurate modeling. It discusses key concepts such as orthogonalization, crowding, and the evolving dynamics of hedging strategies. Through academic references and critical analysis, the chapter challenges conventional wisdom about factor models and their implications for investment approaches.

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