Our Approach to Investing
What We Do
Using decades of experience in research, technology, and quantitative trading, Crabel has developed several unique absolute return programs that serve as liquid, transparent, and diversified investment options for institutional clients. By combining observation and judgement with data science and leading-edge technology, our investment approach allows us to provide systematic trading programs in line with our core investment philosophies.
Core Investment Philosophies
Trade research begins with an observation or insight into the market. From there, we explore new portfolio designs and develop new technologies with a thoughtful and scientific approach. Our reputation for excellence was built on the relentless pursuit of orthogonal trading strategies, exceptional employees, leading edge technology, and attention to controlling risk. Read more about how we think about the science of investing below.
Research & Alpha Discovery
Philosophy #1
Quantify everything.
For over 30 years, our rigorous research process has been grounded in the scientific method. We seek to identify persistent, explainable market anomalies across a wide range of instruments and employ a testing methodology for each trading idea. Our short-term trading concepts are designed to exploit behavior-based inefficiencies from a variety of different market environments, and we develop strategies to cover extensive time frames using manual and machine learning techniques. Our researchers are also technologists and developers and work in tandem with our portfolio managers to integrate our quantitative process into our investment programs.
Trading & Execution
Philosophy #2
Execution efficiency is as important as alpha discovery.
In the short-term arena, advanced trade execution is key. We make significant investments in our low-latency execution infrastructure and measure execution speeds in microseconds. Since execution costs can erode alpha, we are extremely mindful of keeping these costs low. Our multiple global co-location sites are designed to reduce latency and support continuous, redundant connectivity across 250+ global futures and foreign exchange markets, which aid in the endeavor of cost minimization. Asset managers can no longer afford to develop trading strategies without a cohesive execution plan, and we recognize that how we implement a trade is as important as the trade concept itself.
Risk Management
Philosophy #3
Live to trade another day.
We focus on capital preservation through comprehensive risk controls. As a systematic trader, we incorporate risk management into the strategy and overall portfolio design and apply it in an automated fashion. Each portfolio has an annual volatility target to establish the risk budget as well as multiple layers of risk controls at both the position and portfolio levels. Our attention to risk parameters allows us to participate fully when market conditions are conducive to our unique style of trading and manage downside risk more actively when conditions are not as conducive.
Operational Excellence
Philosophy #4
Innovate and improve.
Our daily mantra is constant innovation and continuous improvement. Alpha decay is a genuine concern across all trading strategies and ongoing research is required to adapt to the constantly evolving financial landscape. As a result, our research process has continued to evolve over 30+ years and our experienced research team collaborates in the identification of novel ways to elevate our strategy research, algorithmic execution development, and technological integration. These efforts are fully supported by our experienced operations teams who focus on providing institutional quality services.
