Statistics for Financial Markets - Module 2
Knowledge of Statistics is an essential prerequisite to learn Algorithmic Trading. In addition to theoretical knowledge, one must understand the practical application of statistics, using actual data and case studies.
These two points form the basis of pedagogy at QuantInsti for the “Statistics for Financial Markets” course. With a clear vision of making Algorithmic trading an inclusive space for candidates of all backgrounds, we have worked hard to create a module which can be absorbed by the beginners while keeping it engaging for advanced learners simultaneously.
This module doesn’t use Python or programming skills and relies heavily on old-school spreadsheets for analysis and application of concepts. We have another module on Advanced Statistics which comes much later in the 6-month course duration of EPAT.
EPAT Module on Statistics for financial markets
The Statistics for financial markets course is part of QuantInsti’s Executive Programme in Algorithmic Trading (EPAT), and not available separately.
The module consists of 12 hours of live training including faculty interaction and problem-solving using spreadsheets and Python. The faculty members involved in creating, maintaining and delivering the course on Statistics include Mr. Nitin Aggarwal.
To keep the course hands-on we have applied all statistical concepts on real markets data. The aim is to introduce learners to a robust strategy creation process which includes portfolio and risk management.
Syllabus of Statistics for financial markets
1. Probability, Statistics, and Risk Assessment
- Define and calculate probability for single and multiple events.
- Differentiate between independent and mutually exclusive events.
- Understand probability distributions, mass functions, and density functions.
- Calculate expected value and apply it to investment decisions.
- Analyze normal distribution characteristics (68-95-99 rule) and their relevance to risk.
- Measure risk using standard deviation, variance, and volatility metrics.
2. Financial Models and Hypothesis Testing
- Explain the Capital Asset Pricing Model (CAPM) and systematic risk factors.
- Use linear regression and R-squared to identify relationships between financial variables.
- Assess stock beta to evaluate volatility relative to the market.
- Perform hypothesis testing using null and alternative hypotheses.
- Interpret p-values and significance levels to accept or reject statistical assumptions.
3. Portfolio and Market Analysis
- Construct weighted portfolios to minimize risk through asset diversification.
- Analyze financial instruments using historical volatility and return distributions.
- Compare stock volatility using standard deviation to determine risk levels.
- Utilize Monte Carlo Simulation and Random Walk models for price prediction.
- Interpret Bollinger Bands for momentum, support, and resistance levels in trading.
4. Trading Strategy Development in Excel
- Build and test trading strategies using Excel functions and formulas.
- Calculate and interpret technical indicators such as:
- Simple Moving Averages (SMA) for trend identification.
- Volume Weighted Average Price (VWAP) for trade execution analysis.
- Relative Strength Index (RSI) for overbought and oversold signals.
- Implement trading strategies for stable, low-volatility consumer stocks.
- Evaluate strategy effectiveness using historical price data and performance metrics.
5. Practical Application of Excel for Financial Analysis
- Apply Excel functions for probability and statistical analysis (LOG, STDEV.S, CORREL, VAR.S, COVARIANCE.S, SQRT, COMBIN).
- Use Excel matrix functions like FREQUENCY for data analysis.
- Implement pre-trade and post-trade analysis techniques using Excel tools.
This combined learning objective framework ensures a structured approach to understanding probability, risk, market microstructure, and trading strategies using Excel.
View Entire CurriculumWhat is EPAT?
EPAT is a fully online live classroom course, with 120+ hours of live training and ~150 hours of self-study content. A few features of EPAT are mentioned below.
Accreditations & Certifications
- Institute of Banking and Finance (IBF, Singapore): EPAT has been accredited by The Institute of Banking and Finance (IBF, Singapore) under the IBF Standards.
- Continuing Professional Development, UK: EPAT is accredited by CPD, UK (Continuing Professional Development, UK).
Key Benefits
Industry exposure and networking: EPAT provides access to -
- Live projects and case studies: Real-world scenarios help participants understand the workflow of a quant developer.
- Industry mentors: The program offers mentorship from industry professionals, which helps in practical learning and career guidance.
- Alumni network: QuantInsti has a global alumni network that aids in job placements and networking in the quant finance industry
Career and Placement Support
- Regular job postings and upskill opportunities via our Lifetime Placement Services.
- 300+ Hiring Partners in Quant Trading, Research, and Development.
- Interview preparation sessions to boost career readiness.
- Ongoing query resolution for technical challenges, trading desk setups, and Professional Growth.
- Expert mentorship to navigate the professional journey and achieve trading success.
- Connect with leading algorithmic trading firms through our expansive industry network.
Community & Continued Growth
- Access to a thriving alumni community through webinars, book clubs, and active Telegram/WhatsApp groups for knowledge sharing and collaboration.
- Exclusive perks such as strategy ideations via interactive learning modules on Quantra.
Hands-on Learning
- Practical sessions including Python programming and other hands-on modules to ensure a well-rounded, applied learning experience
- Personalized support for specializing in trading strategies with live project mentorship.
Backtesting & Live Trading
- Exploring various backtesting techniques and APIs
- Analyzing historical data and backtesting strategies
- Code and backtest strategies on various platforms
Post-Course Opportunities
- Lifetime access to the full and updated EPAT content, ensuring continuous learning in areas AI-ML, LLM, Automated Trading and more.
- Networking events are available post-completion of the course, such as QuantInsti.
- Alumni Book Club Events, Sessions by Faculty on Trading Strategies and much more
Schedule an EPAT counselling call
To understand if EPAT is the right choice for you, talk to one of our specialists who have counselled thousands of learners over the past decade and helped them make the right career decision.
