Low volatility investment strategies exploit the low volatility anomaly.
A generic low volatility strategy selects stocks based on the volatility of past returns.
From an investor’s point of view, such a quantitative strategy offers higher risk-adjusted returns as measured by the Sharpe Ratio.
This ratio indicates the extent to which investors are rewarded for the (absolute) risk they take.
In other words, how much return they receive per unit of risk they take.
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