CEO Kevin O’Brien Discusses How to Take Advantage of Rising Market Correlation ::
July 29, 2010
On CNBC’s “Talking Numbers” July 29, 2010, with Maria Bartiromo, Kevin O’Brien discusses the recent trend of rising correlation between stocks and market indices, which is believed to be caused by the dominance of High Frequency Trading (HFT) and Exchange Traded Funds (ETF). This has led many market participants to suggest that fundamentals of stocks no longer matter, but Revere believes the opposite is true; indiscriminate selling caused by HFT and ETF can create attractive opportunities for investors who are patient with a longer investment horizon.
To prove this hypothesis, Revere back-tested three strategies based on three different sets of fundamental factors: Value, Geographic Revenue Exposure, and Under-the-radar Sectors. On average, these three strategies have outperformed the S&P 500 YTD by 0.67%, 4.31% and 7.19%, respectively.