Interacting Anomalies

B-Tier
Journal: Review of Asset Pricing Studies
Year: 2025
Volume: 15
Issue: 2
Pages: 162-216

Authors (2)

Karsten Müller (National University of Singapo...) Simon N M Schmickler (not in RePEc)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

An extensive literature studies interactions of stock market anomalies using double-sorted portfolios. But given hundreds of known candidate anomalies, examining selected interactions is subject to a data mining critique. In this paper, we conduct a comprehensive analysis of all possible double-sorted portfolios constructed from 102 underlying anomalies. We find hundreds of statistically significant anomaly interactions, even after accounting for multiple hypothesis testing. An out-of-sample trading strategy that invests in the top backward-looking double-sort strategy generates equal-weighted (value-weighted) monthly average returns of 4% (2.7%) at an annualized Sharpe ratio of 2 (1.38), on par with state-of-the-art anomaly-based machine learning strategies.

Technical Details

RePEc Handle
repec:oup:rasset:v:15:y:2025:i:2:p:162-216.
Journal Field
Finance
Author Count
2
Added to Database
2026-01-26