That's a cool way to evaluate the value of stocks within and index and I hadn't really thought of it that way. Often, I use a very "brute force" approach where I apply a setup or model to a chart and simply work my way through the equity curves and correlations to arrive as a group of stocks I think "best describe" what I'm trying to accomplish and use those stocks. PCA would probably be much more efficient if you pointed it at the correct metric. Cool stuff.
Yes. You can use PCA to "pick" stocks. I used it on utility stocks. It helped to isolate subsets of utility stocks that share similar characteristics, then I trade them as a basket. Cool indeed.
That's a cool way to evaluate the value of stocks within and index and I hadn't really thought of it that way. Often, I use a very "brute force" approach where I apply a setup or model to a chart and simply work my way through the equity curves and correlations to arrive as a group of stocks I think "best describe" what I'm trying to accomplish and use those stocks. PCA would probably be much more efficient if you pointed it at the correct metric. Cool stuff.
Yes. You can use PCA to "pick" stocks. I used it on utility stocks. It helped to isolate subsets of utility stocks that share similar characteristics, then I trade them as a basket. Cool indeed.
That’s a great idea Nam!