Factor Investing Explained

Factor investing decomposes returns into persistent risk premia such as value, quality, momentum, and size.

Core Factor Concepts

  • Factors explain common return patterns across groups of securities.
  • Portfolios can become unintentionally concentrated in one factor.
  • Factor regimes can rotate and impact relative performance.

Portfolio Application

  • Track factor concentration alongside sector concentration.
  • Use diversified factor exposure to reduce regime fragility.
  • Optimize allocation while respecting factor risk limits.

How Algovestiq Applies Factors

  • The Algovestiq AIQ Score combines momentum, valuation, quality, and risk into one 0-100 stock rating.
  • AIQ Edge adds the peer-relative layer, showing whether a stock has stronger factor evidence than comparable companies.
  • Use factor investing concepts to inspect why an AIQ Score is high or low instead of treating the score as a black box.
Optimize Factor-Aware AllocationAlgovestiq AIQ Score MethodologyPortfolio Concentration RiskPortfolio Volatility