Timing the Momentum Factor Using Its Own Volatility

quantnook.blogspot.com

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Joltypark

a day ago


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Joltypark a day ago

This post explores how using the momentum factor’s own historical volatility to time exposure can improve returns and risk-adjusted performance. Using nearly 100 years of data from Kenneth R. French’s Data Library, the analysis shows that limiting exposure during high-volatility periods reduces drawdowns and enhances the Sharpe ratio. Includes clear data-driven insights and visualizations for those interested in quantitative investing and factor strategies.