ALPHA DECAY is the phenomenon whereby a particular investment methodology deteriorates in performance over time. Initially well suited to the original market conditions at the time of inception. As AI technology, time and market conditions evolve, traditional methodologies are losing performance faster than ever. They will end up with negative Alpha, from which they cannot recover.
Year on year, we have witnessed ALPHA DECAY increasing is speed. For various and complex reasons, this phenomenon is gathering momentum.
Traditional Methodologies used to deliver a few years of performance before decaying. However, nowadays we’ve observed few non Machine-Learning based methodologies are able to deliver even a single year of performance before irreversible performance decay occurs.
TECHNOLOGY IS THE ANSWER
Overcoming and outpacing ALPHA DECAY has been the prime focus point of our scientists and market experts driving the MODELOMNI Technology Lab.
We saw this trend coming and gathering pace and created the MODELOMNI Technology Lab.
Technology only helps however if you are committed to constant and never-ending development, driven by a leader (or leading team) with the vision, the resources and the will to overcome the incredibly complex challenges involved.
It is in our DNA to constantly work at the forefront of technology, currently with Machine Learning & Deep Learning Neural Networks and explore the immense promises quantum computing may offer.
Artificial Intelligence is relentless in focussing on a single task, 24 hours a day, and consistently learning from its environment (the data) in ways humans can’t match.
Our models are constantly evolved, optimised, morphed into the next generation of algorithms.
MODELOMNI trading models also have low to no correlation with one another. Each trading model is specifically designed to operate in a particular set of market conditions and to become active only when these unique conditions are met.
The diversification and development of new models is the only possible solution to outpacing Alpha Decay