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Dynamic Asset Allocation via Hidden Markov Models: An Analysis

In my previous analysis , I explored the structural trade-offs between pure growth equities via QQQ and options-derived income via JEPQ. While static back tests provided valuable insights into performance across historical market phases, I wanted to create a more rigorous quantitative analysis, taking into account the non-stationarity of financial markets. To this end, I developed an unsupervised 3-state Gaussian Hidden Markov Model (HMM) that dynamically identifies market regimes in real-time and allocates capital among QQQ, JEPQ, and Risk-Free Cash. 1. Methodology & Unsupervised State Discovery Feature Engineering & Emission Selection Rather than relying on ad-hoc technical indicators, the HMM relies on two mathematical features observed at daily frequency:      1. QQQ Daily Log Returns:      2. QQQ 5-Day Realized Volatility: These emissions capture both price momentum and local volatility clustering. Model Mechanics & Expect...
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JEPQ vs. QQQ: Finding Signals in the Noise

As a first-time investor, researching on what financial instruments to invest in, I narrowed my options to two technology ETFs, JEPQ and QQQ. QQQ tracks the NASDAQ 100 index, meaning its fluctuations are tied to that of the NASDAQ 100. JEPQ tracks some of the top stocks in the NASDAQ 100, and sells covered calls to generate monthly dividends for investors. On paper, it seems like JEPQ is for more conservative investors, capping the potential gains with the calls, but also insuring against sharp falls. QQQ, on the other hand, is subject to the whims of the market, with the potential for large gains, but also the risk of steep falls. I wanted to leverage my expertise with data, and see if there were any patterns or trends that I could spot, that would give me a better chance of having success with my investments. For this, I used the daily price data for JEPQ and QQQ from May 4 th , 2022, to December 25 th , 2025. If I invested on Day 1, what would be my total return on Day x ? To an...

An Analysis of Car and Driver Impact on Formula 1 Success - Part 2

  In the previous part of this project, I looked at the variables I was using, and some of the trends that I identified through a preliminary analysis. Part 2 of this project is dedicated to:  - The research questions I formulated  - The statistical analyses that I used for each question  - The interpretation of my analysis  - What conclusions I was able to draw to answer each research question Research Questions Based on my preliminary analysis of the variables that I was working with, I came up with more questions that I was interested in exploring, in addition to my original goal of figuring out whether the car or driver was more crucial to Formula 1 success. One of the first things that piqued my interest was how the different points systems affected overall scoring. While it was immediately clear that the change in point scoring systems from 10 points for a win to 25 points for a win resulted in drastic changes to the point totals, my hypothesis was ...

An Analysis of Car and Driver Impact on Formula 1 Success - Part 1

One of the most hotly debated topics in Formula 1 is over who should receive more of the plaudits for success, the car, or the driver. There are many views that range over the entire spectrum of opinions, from those who believe that the best car would win even with the worst driver, to those who think that the best driver can single-handedly drag a middling car to greatness. As a Formula 1 fan, I have always been very intrigued by this question. The goal of my analysis in the paper is to provide a quantitative look at this age-old question and set up a foundation upon which further empirical research into this topic can be conducted. This project is adapted from a project that I worked on for a college Statistics for Data Science class that I had taken. In this project, I looked at the last 30 years of Formula 1 data, spanning 1994 to 2023. I looked at various statistics that I thought would be insightful, and I eliminated metrics that were redundant and did not offer much avenue f...

The Car Driver Quandary

  If you were a Formula 1 team principal, would you rather have the best driver or the best car? For those of you who are regular readers of the blog, firstly, thank you for your support. It means a lot to me. Secondly, this might seem like a weird hook, considering my previous articles have all been about basketball. While that is true, I am actually a big fan of multiple sports, including football (soccer to American readers), baseball, Formula 1, and yes, basketball. Instead of creating a different blog for each sport, I figured it would be better to write about multiple different sports on the same blog. The dilemma of car or driver popped into my head while I was watching the US Grand Prix this past weekend. While Max Verstappen was comfortably on his way to another victory, the 50 th of his career, there were many interesting battles throughout the rest of the field. This got me thinking about the age-old question of whether having the best driver or the best car brings ...

The Fastest Gun in The West: ‘Pistol’ Pete Maravich

Pete Maravich once said, “I don’t want to play 10 years (in the NBA) and then die of a heart attack when I’m 40.” Ironically, Maravich would play for 10 years in the NBA, and would die of heart failure at the age of 40. Maravich was a talented high school basketball player, and his identifying nickname, ‘Pistol’, originated in high school. This name came from his unorthodox shooting form. Maravich would shoot the ball from his side, from a position similar to where a gun was held. Maravich would burnish his already growing legend with a storied college career. With a total of 3,667 points and an average of 44.2 points per game over his time at LSU, Maravich holds the records for both career points totals and career point per game average. Notable, Maravich only played 83 games over his collegiate career, which is the lowest number of games played in the top 25 of scoring leaders. Additionally, Maravich did not play in the varsity team in his freshman year, as the rules prohibited h...