Are You Trading Predictably?

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Financial Analysts Journal
March/April 2011 | Vol. 67 | No. 2 | 9 pages
Source: CFA Institute
Steven L. Heston Robert A. Korajczyk Ronnie Sadka Lewis D. Thorson

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Abstract

The authors find predictable patterns in stock returns. Stocks whose relative returns are high in a given half hour today exhibit similar outperformance in the same half hour on subsequent days. The effect is stronger at both the beginning and the end of the trading day. These results suggest that strategically shifting the timing of trades can significantly reduce execution costs for institutional traders.

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Topics
Behavioral Finance
    :
  • Institutional Investor Decision Making
|
Equity Investments
|
Performance Measurement and Evaluation
    :
  • Specific Investor Issues
|
Portfolio Management
    :
  • Equity Portfolio Management Strategies
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