Quantitative Strategies

Since the firm’s inception in 1988, the D. E. Shaw group has used its proprietary mathematical techniques to analyze tens of thousands of financial instruments across asset classes and countries in a search for potential inefficiencies. Inefficiencies are typically identified through a controlled process of hypothesis formulation, testing, and rigorous validation, rather than through a blind search over the firm’s historical database. Based on this research, models believed to be statistically robust are incorporated into trading strategies that typically operate in real time, drawing on a nearly continuous stream of data obtained from the world’s financial markets.

The firm’s proprietary optimization technology plays an important role in automated planning of trades across multiple time horizons, automatically balancing the expected profit associated with a particular transaction with various risk management constraints and a consideration of both fixed and variable transaction costs. These quantitative optimization techniques are the ongoing result of a continuous and highly intensive research and development effort.

The D. E. Shaw group has also committed itself to the establishment of a world-class institutional asset management business and currently deploys a long-only structured equity strategy. In the coming months, the firm hopes to further expand its array of institutional asset management products to accommodate additional strategies.