6-month momentum is a technical factor. It involves buying stocks with positive momentum over a 6 month time period. Momentum or technical indicators leverage behavioural finance. Investors succumb to ‘herd bias’ which cause stocks to be over or under sold. A positive momentum could indicate that a stock will continue to rise while a negative momentum could indicate its continued downtrend. While the value factor is a convergence to fair value, momentum can be thought of as a divergence from fair value.
To calculate a stocks 6 month momentum, we divide the current price by the closing price 6 months previous.
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6 Month Momentum
Definition
6-month momentum is a technical factor. It involves buying stocks with positive momentum over a 6 month time period. Momentum or technical indicators leverage behavioural finance. Investors succumb to ‘herd bias’ which cause stocks to be over or under sold. A positive momentum could indicate that a stock will continue to rise while a negative momentum could indicate its continued downtrend. While the value factor is a convergence to fair value, momentum can be thought of as a divergence from fair value.
To calculate a stocks 6 month momentum, we divide the current price by the closing price 6 months previous.
Strategy
Value
Technical
Quality
Dividend
Health
Persona