With the development of big data technology, data science has been widely used in the financial industry to help investment managers make better decisions. Hedge funds and investment banks hire a lot of data scientists and quants to work on areas like high-frequency trading, portfolio optimization, risk management and quantitative trading strategies. Data scientists in finance need to have strong quantitative skills in math, statistics and computer science as well as good understanding of the finance industry.
data science helps hedge funds on high-frequency trading and portfolio optimization
As the article mentioned, major hedge funds like Citadel, Two Sigma and DE Shaw all have data science teams working on high-frequency trading, where stock price data at microsecond level needs advanced tech like machine learning and big data platforms to analyze and optimize. Data scientists also work closely with portfolio managers on tasks like forecasting, optimization of portfolio allocation and automated trading.
investment banks leverage data science for trading analytics and risk management
Big investment banks also recruit a lot of data scientists and quants in areas like equity/derivatives trading analytics to help their clients, market risk management and credit risk management. Skills like statistical forecasting, derivatives pricing models and good communication skills are important for quants in investment banks.
data science helps drive profits in financial industry but high stress
With advanced analytics and automated trading powered by data science and machine learning models, profits and bonuses can be very high for data scientists in hedge funds and investment banks. However, the job also involves high stress and long working hours. Data scientists interested to work in finance need strong technical skills and high work endurance.
math, statistics and computer science grads suitable for data science jobs in finance
As concluded from the examples, PhDs in math, statistics, computer science and physics are suitable for data scientist roles in hedge funds and investment banks. Master degrees like financial engineering, financial math and computational finance also qualify. Good quantitative skills in probability theory, machine learning models and programming are essential.
In summary, data science is playing an important role in the investment management field including major hedge funds and investment banks to help drive profits through advanced analytics and automated trading systems. However, data scientists need both strong technical skills and high stress endurance due to the intense nature of the finance industry.