Quantitative analysis uses mathematics, statistics, research, modeling and measurement to explain and predict behavior. Quantitative analysis depicts reality in numbers. Using quantitative analysis, researchers and analysts can evaluate financial instruments and performance. Quantitative analysis can also predict events such as changes in a country’s gross domestic product (GDP) and how much an investment is likely to yield over time.
- Quantitative analysis uses mathematics, statistics, research, modeling and measurement to explain and predict behavior.
- Quantitative analysis depicts reality in numbers.
- Quantitative analysis can be used to evaluate financial instruments.
- Quantitative analysis can predict real-world events like a country’s gross domestic product (GDP) or the profitability of an investment.
Understanding Quantitative Analysis
Quantitative analysis uses objective measurements and statistical analysis of data using computational techniques to describe or predict behavior.
Quantitative analysis empowers analysts to analyze past, present and future events or activities. The practice can be used in any field of human research that involves numbers such as sports, medicine, chemistry, social science and finance. In financial circles, analysts who do hardcore quantitative analysis are often called “quant jockeys” or “quants.”
This analysis guides the monetary and economic policies of institutions and governments. Institutions (e.g. central banks, ministries of finance) and governments track and evaluate data such as employment rate and average earnings.
Quantitative Analysis in Commercial Real Estate
In commercial real estate services, quantitative analysis is used to guide investment decisions and examine investment opportunities. Quantitative analysis can help you know if it is a good idea to buy or sell a property. It can also help you determine if an asset is overpriced, underpriced or just right. Quantitative analysis can be simple, for instance, examining a single factor like the unit cost of a property, or complex involving extensive calculations such as lifetime valuation of a property. It can also be used during the commercial appraisal process.
Quantitative Analysis vs Qualitative Analysis
While quantitative analysis is a technique that relies on numbers and computation, qualitative analysis relies on insights and observations. While quantitative analysis is objective, qualitative analysis is subjective. Both techniques are complementary and they are often used together for evaluating a company’s performance.
For example, to evaluate a company’s performance, quantitative analysis may be used to examine its sales, revenue, and return on assets. Quantitative analysis would be enough for the numbers but would be unable to measure some human factors such as burnout and staff morale. A qualitative analysis would be required to study those factors. Qualitative analysis helps uncover the deeper themes, thoughts and experiences in a given context. Qualitative analysis addresses the reasons behind and the expressions of human behavior.
Quantitative analysis and qualitative analysis complement each other. Together, quantitative and qualitative analysis provide factual information that can improve decision-making, leading to better businesses. See also SWOT analysis.