Sample interview questions: How do you handle situations where there are limitations in the availability of data for specific financial instruments?
Sample answer:
Data Limitations Mitigation Strategies for Quantitative Analysts:
1. Data Augmentation:
* Synthetic data generation using machine learning algorithms (e.g., GANs)
* Interpolation and extrapolation techniques to estimate missing data points
2. Domain Knowledge and Expert Consultation:
* Leverage industry knowledge and consult with subject matter experts to make informed assumptions
3. Proxy Data:
* Identify similar financial instruments or markets with more available data to serve as a proxy
4. Alternative Data Sources:
* Explore unconventional data sources such as news feeds, social media sentiment, and satellite imagery for additional insights
5. Model Assumptions:
* Clearly state and document assumptions made to compensate for missing data, such as normality, independence, or stationarity
6. Robust Models:
* Develop models that are insensitive to small variations in data due to missing observations
7. Ensemble Methods:
* Combine multiple models trained on different subsets of available data to reduce the impact of individual missing data poi… Read full answer
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