Performance analysis of eigenportfolios for AR(1) process

Onur Yilmaz, Ali N. Akansu

Research output: Chapter in Book/Report/Conference proceedingConference contribution

5 Scopus citations

Abstract

In this paper, we analyze eigenportfolio returns for discrete AR(1) process. We derive closed-form expressions for Sharpe ratio and market exposure of eigenportfolios. We calculate and compare their performance for various model parameters. We validate AR(1) based covariance approximation for the market data of a basket with five stocks.

Original languageEnglish (US)
Title of host publication2016 50th Annual Conference on Information Systems and Sciences, CISS 2016
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages496-499
Number of pages4
ISBN (Electronic)9781467394574
DOIs
StatePublished - Apr 26 2016
Event50th Annual Conference on Information Systems and Sciences, CISS 2016 - Princeton, United States
Duration: Mar 16 2016Mar 18 2016

Publication series

Name2016 50th Annual Conference on Information Systems and Sciences, CISS 2016

Other

Other50th Annual Conference on Information Systems and Sciences, CISS 2016
Country/TerritoryUnited States
CityPrinceton
Period3/16/163/18/16

All Science Journal Classification (ASJC) codes

  • Information Systems
  • Computer Networks and Communications

Keywords

  • Eigenportfolios
  • Karhunen-Loeve Transform
  • Market exposure
  • PNL
  • Principal component analysis
  • Sharpe ratio

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