Z-scores in Investing and Finance: Are You Using Them Right?

Source giphy.com

When risk managers or quant professionals need to compare different metric types or normalize data, z-scores are their go-to measure. In theory, Z-scores are powerful and easy to understand. In practical use, however, they have two strong limitations that can affect their interpretation:

  • A high sensitivity to the distribution of underlying data

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A Quant in the Cloud. Expert in the field ML, AWS & Big data. CTO at https://1275collections.com

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Charles Malafosse

Charles Malafosse

A Quant in the Cloud. Expert in the field ML, AWS & Big data. CTO at https://1275collections.com

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