7 ESG-Driven Strategies for Alpha Generation in Quantitative Investing
Environmental, social, and governance (ESG) factors have evolved from ethical screening tools to quantifiable alpha generators. Sophisticated investors now use DEEP data analytics and factor modeling to exploit sustainability-related market inefficiencies, transforming risk mitigation into superior risk-adjusted returns.
The seven most potent strategies leverage ESG score analysis to enhance portfolio performance. These include relative ESG momentum trading, financial materiality filtering, and long-short ESG arbitrage. Governance-focused selection and human capital ROI quantification also emerge as key differentiators.
This represents a paradigm shift from passive ESG filtering to active, data-driven integration. The approaches target statistically significant alpha sources while building long-term portfolio resilience against systemic risks.
