event-driven

Event-driven trading systematically exploits corporate catalysts like earnings surprises, M&A announcements, and index rebalances to turn asynchronous market moves into repeatable trading opportunities. It uses screening, portfolio construction, and risk management to capture these moves.

To build a PEAD or earnings drift strategy, use event-study methodology to analyze earnings surprises and construct a portfolio that captures post-announcement price drift. Apply risk management and scenario stress testing to validate the setup before execution.

Yes, merger arbitrage and special situations screening are core features. You can screen for M&A announcements, spin-offs, and index changes, then construct a merger arb portfolio with specific risk controls to manage deal break scenarios.

Backtest an event-driven trading plan by drafting an end-to-end strategy focused on earnings, M&A, and index rebalancing, then configuring a simple backtest setup to validate performance. Include risk management and scenario stress testing in the backtest.

Scenario stress testing is required for event-driven risk management. It allows you to evaluate portfolio resilience against deal failures, earnings misses, and index rebalance disruptions before deploying capital.

The best way to manage risk in an event-driven portfolio is through scenario stress testing and dedicated risk controls. Apply these during portfolio construction for merger arb, PEAD, and spin-off strategies to handle asynchronous market moves.