What Are Stock Splits?
A stock split is a decision by the company’s board of directors to increase a company’s number of shares, causing a decrease in the stock price and making shares more affordable. A stock split does …
Alpha Models
Algorithmic Chart Pattern Detection
Traders using technical analysis attempt to profit from supply and demand imbalances. Technicians use price and volume patterns to identify these potential imbalances to profit from them. Algorithmic chart pattern detection allows a trader to …
Keltner Channels: Explained & Coded
Keltner Channels are a technical indicator that combines an exponential moving average with volatility-based envelopes set above and below the EMA at a fixed percentage of the same duration. Keltner Channels aims to identify the …
Sector Momentum: Explained & Backtested
Sector momentum is a sector rotation strategy to boost performance by ranking sectors according to their momentum, buying top performers, and selling laggards. In this post, I describe sector momentum and why it works and …
The Cost of Capital
The cost of capital is the weighted average of the cost of equity and the cost of debt. It’s the rate both equity and debt investors demand as a return or the hurdle rate if you’re …
The Cost of Debt
The cost of debt is the rate at which a company can borrow long-term today. It will reflect the firm’s default risk and the level of interest rates in the market. It is the sum …
How to Create an Equities Database
When researching what works in the markets, you’ll want to store your data in a database. There are many reasons why, but the two primary purposes are data persistence and flexibility. I’m going to show …
The Cost of Equity
The cost of equity is the return demanded for an individual equity. It’s the return needed for investors to compensate for equity risk, and it’s the cost of equity funding for the company. The cost …
What Is Shareholders’ Equity?
Equity, also called shareholders’ equity or stakeholder equity, gives the holder proportional rights to the remaining cash flows after all debts have been paid. The value of equity depends on your perspective and has both …
Beta & Relative Risk
We can add the risk-free rate and the equity risk premium to determine how much the market, or an average risk stock, will return. But what if our stock is more or less risky than …
