With Factor Profile, you can see how a factor is trending and apply whether it is overbought or oversold in your portfolio construction process.

When a factor is oversold, it has deviated from its long-term return trend by over 1 standard deviation. An extremely oversold factor has deviated from its long-term return trend by over 2 standard deviations.

Historically, when looking at the next quarter of trading, whether a factor is extremely oversold or simply oversold, the model shows it reverts to its long-term return trend more than 70% of the time.

A reversion to the long-term return trend occurs when the normalized factor return moves from its current overbought or oversold levels (i.e. >1 or >2 standard deviations) to within 0.5 standard deviations of the long-term trend for at least a week of trading.

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