SimCorp launches global Axioma equity factor risk model to support short-horizon trading after volatile year

New York – January 7, 2025 – SimCorp, a global leader in financial technology, today announced the launch of its Axioma Worldwide Equity Factor Risk Model: Trading Horizon. This risk model provides portfolio managers and risk professionals with the precision analytics required for investment strategies that often require rebalancing daily or weekly, including systematic and algorithmic strategies.  
The model forecasts risk over the next 20 days and provides daily updates on factor exposures and returns, enabling portfolio managers to capture day-to-day shifts in risk profiles across trading books and other portfolios with short investment horizons. This makes the model particularly valuable for portfolio managers facing abrupt changes in market direction or underlying sources of risk. 

Unlike traditional risk models, the Trading Horizon Model incorporates specialized style factors such as Opinion Divergence and Short interest, alongside fundamental and market-based factors tailored for short-horizon strategies. These features allow for granular insights into liquidity, downside risk, and non-linear residual effects — key drivers of volatility in today’s environment. 

Real-world use cases: Navigating tariff disputes and AI-driven market flows 

SimCorp has introduced this innovation at a critical time. Last year saw massive flows into AI-related equities, which amplified short-term momentum and liquidity risks, while tariff escalations between major economies triggered sharp currency fluctuations and sector rotations. Following the tariffs announced on April 2, the Trading Horizon Model responded with a risk forecast that nearly doubled from April 3 to April 4 - a far larger spike than observed in other model variants.

Using Axioma Worldwide Equity Factor Risk Model: Trading Horizon, a portfolio manager can:

• Quantify exposure to Exchange Rate Sensitivity to hedge against FX-driven shocks from tariff disputes.
• Monitor Short-Term Momentum and Opinion Divergence to identify crowded trades in AI stocks and mitigate reversal risk. 
• Assess Liquidity and Downside Risk factors daily, ensuring portfolios remain resilient amid sudden sell-offs.

“Markets are moving faster than ever, and traditional risk models often fail to capture short-term dynamics,” said Ian Lumb, Head of Analytics Product Management at SimCorp. “Investors gain an edge by using the Trading Horizon Model as a leading indicator for portfolio rebalancing decisions and for understanding risk sources during volatile periods. It provides actionable insights to manage short-horizon strategies effectively, such as identifying crowded trades, making it easier for portfolio managers to adjust positions in specific stocks before volatility intensifies.”

• Get daily insights: Capture day-to-day changes in risk of the trading book and other portfolios. 
• Manage risk: Manage the risk of high turnover strategies that are rebalanced daily or weekly. 
• Test strategies: Implement smarter, more efficient, short-term hedging strategies. 
• Rebalance with confidence: Understand the trade-off between risk and market impact/slippage and improve portfolio implementation and execution. 
• Understand risk drivers: Capture the event-driven risk stemming from earnings announcements, short-squeezes and other infrequent events.

This announcement follows the launch of the Axioma Worldwide Equity Factor Risk Model released in 2025. This flagship risk model also includes a dedicated U.S. version of the model for region-specific analysis.

For more information about the Axioma Equity Factor Risk Model – Trading Horizon, visit here, or read this analysis by Melissa Brown, Head of Investment Decision Research at SimCorp, which examines how the model reacted during the 2008 Global Financial Crisis, the 2020 COVID crash, and 2025 “Liberation Day.”