Information Coefficient Quant Interview Guide
Information coefficient quant interview guide covering IC definition, Pearson versus Spearman, horizon, stability, examples, and caveats.
Candidates measuring signal-return relationship and predictive quality.
IC measures signal-return association
Information coefficient usually measures correlation between signal values and future returns over a chosen horizon and universe.
Definition choices matter
Pearson IC emphasizes linear relationships and outliers, while rank IC uses ordering and is often useful for cross-sectional signals.
Concrete example
If higher signal scores tend to be followed by higher next-week returns across stocks, the cross-sectional IC may be positive.
Stability is the real test
A signal with modest but stable IC can be more useful than a high IC concentrated in one short period or sector only briefly.
Common mistakes
Candidates often treat IC as a strategy result. It is a signal diagnostic that still needs sizing, costs, and risk controls.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.