Validation Process
Overview:
BCA Research Proprietary Indicators provide insight into the frameworks that our strategists use to inform their investment recommendations. Our researchers use these indicators on a regular basis to build their theses and bolster investment recommendations. Therefore, the efficiency of the indicators is continuously on display within the trades of each publication. The “live” performance of the trades that our team recommends can give you an up to date view on the accuracy of our indicators when used as part of wholistic view of markets.
To give confidence and context to the indicators over and above their efficacy when used by our strategists, we have outlined the process that was undertaken to validate their accuracy.
Validation Process:
The goal of the exercise was to ensure that the indicators exhibit the signals that they were built to provide. Note that these indicators were designed to:
- Gain an overall understanding of macro trends
- Determine where risks in the market lie
- Provide evidence of over/under valuation of assets
The goal of the exercise was to ensure that the indicators exhibit the signals that they were built to provide. Note that these indicators were designed to:
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- Leading Indicator (18 Indicators included)
- Expected Forward Performance (106 Indicators included)
- Long-term Predictors (13 Indicators included)
- Portfolio Analysis (66 Indicators included)
- Leading Indicator (18 Indicators included)
Each indicator within each strategy was broken out by validation type for testing purposes, see the chart below.
We then used our validation system to provide a pass/fail score to each indicator. Less than 1% of indicators did not pass our validation and those indicators were enhanced to improve performance.
