To understand how StyleADVISOR calculates style points as shown in the style map, it is necessary to understand the concept of a Style Basis. A style basis consists of a set of indices, each of which is assigned to a point in a coordinate system, the so-called Manager Style Graph, or Style Map. The example below shows StyleADVISOR’s default style basis. Here, the Style Basis is the Russell Generic Corners, so each of the four Russell style indices are assigned to points in the style map as indicated.
To arrive at the general formula for calculating a style point, let us assume that the style basis contains m indices. Assume further that p1, ... , pm are the points that have been assigned to the indices. Note that each p1 is in fact a two-dimensional point such as (-1,1). Finally, let w1, ... ,wm be the weights that correspond to the m indices. The style point p for this set of weights is then given by the linear combination
p = w1p1 + w2p2 + ... + WNPN
Related Statistics:
Style Analysis
Single Window vs. Rolling Window Style Analysis
