The field of quantitative analysis has to do with the financial, business, and/or economic analysis that aimed at predicting or understanding events or behaviors. This is done by using mathematical calculations and measurements, statistics research, and statistics modeling. A quantitative analyst wants to understand a given reality and represent it by using a numerical value. These skills are required in a variety of different fields, including performance evaluation, measurements, financial instrument valuation, predicting events in the real world, and more. It is usually used in the financial and economic field, often at the government level, where quantitative analysts make predictions on gross domestic product (GDP). That said, it is also very popular within the field of banking and investments.
What is Quantitative Analysis?
The best way to understand quantitative analysis is by viewing it as a method of evaluation and measurement. It examines a range of variables, assigning them mathematical values. This field is hugely important, because it studies definitive, precise values, and these can easily be placed side by side for comparison. This includes, for example, the year over year earnings, revenues, or profits of certain organizations. Many quantitative analysts work in the financial world, where they are called “quant jockeys” or “quants”.
Within the government, there is a huge reliance on quantitative analysts, as their information enables politicians to make decisions on economic and monetary policies. Central banks and governments alike use the skills of these analysts to determine statistical data, such as employment figures and GDP. This, in turn, would be used to drive new policies.
Within the field of investments, quantitative analysts evaluate and calculate key financial figures. This includes the earnings per share (EPS) and the price earnings ration (P/E). They examine a variety of different things, including high complex calculations like option pricing and discounted cash flow, as well as simple statistical data, like profit and revenue.
It is also very important to understand how quantitative analysis differs from qualitative analysis. Quantitative analysis creates a tool that can be used for evaluations. When combined with qualitative analysis, however, it becomes even more important. For instance, a business can look at its return on assets (ROA), profit margins, and sales revenues through quantitative analysis, as it is based on figures. However, not every piece of information can be translated into a mathematical value. For instance, employee morale and brand reputation have a direct impact on the quantitative measures, but they are qualitative in nature. By combining the two, investors, analysts, and businesses are able to determine just how strong is the company, its products, or its services. Qualitative analysis focuses on things such as customer and employee surveys, asking for opinions. Quantitative analysis, meanwhile, looks at the data – warranty claims, customer complaints, repeat customers, and so on. Put together, it paints a full picture of the strengths and weaknesses of a company.
The U.S. Bureau of Labor Statistics (BLS) has categorized quantitative analysts as operations research analysts. These earned an average salary of $79,200 per year as of May 2016, at the bachelor’s degree level. The BLS has also projected that from 2014 to 2024, there will be a 30% increase in demand for operations research analysts. This is one of the biggest growth projections for all occupations, and will translate into some 27,600 new jobs.
According to the BLS, the average annual salary for operations research analysts stood at $79,200 as of May 2016. The bottom 10% of earners had annual salaries of $43,400 or less, while the top 10% earned $132,660 per year or more. The BLS has also reported on common employment sectors for operations analysts, and their associated salaries. This showed that those working in:
- Federal government, earned an average annual salary of $109,770. 6% of operations research analysts worked here.
- Manufacturing, earned an average annual salary of $90,810. 11% of operations research analysts worked here.
- Professional, scientific, and technical services, earned an average annual salary of $83,520. 23% of operations research analysts worked here.
- Management of companies and enterprises, earned an average annual salary of $81,730. 9% of operations research analysts worked here.
- Finance and insurance, earned an average annual salary of $77,630. 26% of operations research analysts worked here.
Geographical location is an important factor as to how much someone can earn. That being said, it is important to understand that areas with higher salaries will also have a higher cost of living.
The BLS has reported that the top five states to work in as an operations research analyst are:
- The District of Columbia, with an average annual salary of $115,000.
- Virginia, with an average annual salary of $106,490.
- New York, with an average annual salary of $106,260.
- Alabama, with an average annual salary of $97,080.
- New Jersey, with an average annual salary of $95,200.
What is probably of greater importance than geographical location with regards to potential salary, is the company that someone works for.
Indeed.com has reported on common employers for those with an interest in quantitative analysis, and their associated salaries. This showed that:
- Averity paid an average annual salary of $194,678.
- GQR Global Markets paid an average annual salary of $178,608.
- FusionFind paid an average annual salary of $158,415.
- Focus Capital Markets paid an average annual salary of $167,170.
- Accounting Career Network paid an average annual salary of $163,388.
- The U.S. Securities and Exchange Commission paid an average annual salary of $157,942.
- Two Sigma Investments, LLC paid an average annual salary of $158,455.
- D.E. Shaw & Co. paid an average annual salary of $155,641.
- Citadel LLC paid an average annual salary of $153,146.
- Selby Jennings paid an average annual salary of $148,887.
Having a good education is vital in obtaining a lucrative career in the field of quantitative analysis. This starts with a bachelor’s degree. For the convenience of students, many schools now offer their degree programs online although on campus studies continue to be popular. Interestingly, however, there are few degrees available at bachelor’s degree level that focus on quantitative analysis. Rather, people are expected to complete a master’s degree, for which a bachelor’s degree in a field of finance is usually recommended. One example of a bachelor’s degree in finance that prepares people for a master’s in quantitative analysis is that offered by UT Dallas.
The degree has a 120 hour curriculum, which includes 42 core courses. Here, students are prepared for analytical techniques and theories that they can use within the field of business. This includes marketing and finance. Additionally, students will learn about the global, international impact on businesses, including political and social factors that impact how a business behaves. Students also have to choose a wealth of elective courses, so that they can gain a greater understanding of issues such as investment and corporate finance.
Students are required to complete a capstone in strategic management, while at the same time studying outside of the Naveen Jindal School of Management. This prepares them to become professionals in the real world. Finally, they must choose a specialized track in finance, with concentrations including:
- Corporate Finance
- Personal Financial Planning
- Real Estate
- Risk Management and Insurance
Graduates from this program are ready to take on positions in the highly complex, rapidly evolving financial environment of today’s world. Students are provided with both theoretical and practical training and learn to be excellent financial decisions makers.
If a bachelor’s degree prepares individuals for a career in quantitative analysis, a master’s or MBA degree allows them to become experts, which would certainly push their career to new heights. This provides students with advanced skills and knowledge and set themselves apart from the rest of the crowd. As with bachelor’s degrees, many master’s programs are now also offered online. This is essential in graduate degree programs because students usually are already employed and will have to integrate their studies with their work schedules.
An excellent example of a master’s degree in quantitative analysis is that offered by American University Washington D.C., College of Arts & Sciences.
Each school is certainly entitled to set its own admission requirements. Nevertheless, they are usually quite similar due to the fact that these requirements demonstrate whether or not someone has the academic capacity to complete a program at graduate degree level. The admissions requirements for the American University Washington D.C., College of Arts & Sciences are:
- A bachelor’s degree from an accredited institution
- Official and unofficial transcripts
- A statement of purpose
- A professional resume
- A writing sample
- A full portfolio
- Letters of recommendation
- GMAT/GRE scores
- PRAXIS scores
- TOELF/IELST for non-native English speakers
Schools are allowed to specific the courses for their curriculum as they see fit. This is why it is very important to study with an accredited university, as this guarantees prospective employers that your degree included courses that meet the minimum requirements for the profession.
For instance, the curriculum for the MS in Professional Science: Quantitative Analysis at the American University Washington D.C. College of Arts & Sciences prepares students to gain a greater understanding of the sciences, while at the same time focusing on management. The school focuses specifically on professions in the field of data mining, predictive modeling, and biostatics. Students have to complete an internship and a capstone project, while at the same time taking part in a variety of professional development activities. These activities are all relevant to the workplace of today, ensuring graduates have an in-depth understanding of management and quantitative methods. Graduates are highly sought after, particularly in fields such as the financial industry, insurance companies, pharmaceutical companies, and consulting firms.
Completing a college education, particularly a master’s degree, is very expensive, both in terms of time and money. Fortunately, colleges and universities will be able to signpost you to financial aid, and they may also have scholarships and grants available that you can apply for. At the same time, there are a number of external scholarships that you may want to consider. These include:
- Wiley: New Scholarship in Critical Quantitative Research
- ICPSR scholarships at the University of Michigan
- The Civic Memorial School Counseling Department Scholarship
- The Fulbright Scholar Program
- The Hope Scholarship
- The Herb Kohl Excellence Scholarship Program
- The OAS/VUB Scholarship Program
- The Coca-Cola Two Year College Scholarships
- The Global Human Development Program
Generally speaking, applying for a scholarship means that you have to comply with a number of requirements. These include studying at a certain school, taking on a certain concentration, aiming to work in a certain field, demonstrating financial need, holding a minimum GPA, belonging to a certain minority group, being a member of a professional organization, or being of a certain gender.
It is not required to become certified in the field of quantitative analysis, but it is certainly recommended. Through certification, you are able demonstrate that you are committed to your own professional development, and to the advancement of the field. That said, completing certification does require a further investment of time and money, and you often have to maintain certification through continuous education credits. However, most people would agree that this is a very worthwhile investment, as it opens new career doors. Some certifications that you may want to consider in the field of quantitative analysis are the:
- Certificate in Quantitative Finance (CQF)
- Certified Quantitative Financial Modeling Professional
- Certified Business Analysis Professional
- Certificate in Corporate Credit Analysis
- Risk Management Certification
It is recommended that you become a member of professional organizations relevant to the field as soon as you decide to study towards a quantitative analysis degree, even at bachelor’s degree level. This is because professional associations and organizations often offer scholarships and grants that you could then become eligible for. More importantly, by being a member of such associations, you will always be at the forefront of new developments within your field, ensuring that your skills and knowledge are always up to date. Additionally, you may be able to complete certifications and continuous education credits. Finally, you can build a professional network that will serve you for a long time in boosting your career.
Some of the associations in the field of quantitative analysis you may want to consider becoming a member of are the:
- Market Research Society
- Society of Quantitative Analysts
- American Society for Quantitative Analysis (ASQA)
- Society for Quantitative Analysis of Behavior
- International Association for Quantitative Finance (IAQF)
- Occupational Outlook Handbook – Operations Research Analysts. (2016, May). Retrieved from https://www.bls.gov/ooh/math/operations-research-analysts.htm
- Quantitative Analyst Salaries in the United States. (2017, Apr. 28). Retrieved from https://www.indeed.com/salaries/Quantitative-Analyst-Salaries
- Bachelor of Science in Finance. (n.d.). Retrieved from http://www.utdallas.edu/academics/fact-sheets/jindal/bs-finance.html
- MS in Professional Science: Quantitative Analysis. (n.d.). Retrieved from http://www.utdallas.edu/academics/fact-sheets/jindal/bs-finance.html