From the course: Algorithmic Trading and Stocks Essential Training

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Data analytics and algorithms

Data analytics and algorithms

From the course: Algorithmic Trading and Stocks Essential Training

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Data analytics and algorithms

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- [Instructor] Now that we understand what algorithmic trading is, let's look at an example. Renaissance Technologies is one of the most famous hedge funds pursuing algorithmic trading. Renaissance, or RenTech as they're sometimes called, gave an example of the type of trade they pursue at one point. They cited that when skies are cloudy, equity markets tend to perform worse than when skies are clear. In other words, blue skies are good for stocks, gray skies are bad. In theory then, we could buy or sell data based on weather forecasts. The reality is that practically speaking, it's very hard to trade on weather patterns though. For one thing they're imprecise and the correlations are low. Renaissance was simply using that as an example, rather than an actual practical illustration for where you could make money. The correlations between stock prices and weather are really too low for them to make sense in most cases.…

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