factor · Interaction
The interaction factor rewards tickers where quality, value and momentum all line up in the same direction. The bet is that stocks bullish on three independent dimensions outperform stocks bullish on only one — independent confirmations strengthen each other multiplicatively, not additively.
Three independent witnesses making the same call carry more weight than one. If quality, value and momentum are scored from different academic traditions on different inputs (balance sheet, valuation multiples, price history) and all three agree on a ticker, that agreement is informative beyond the sum of the three individual scores. The interaction factor explicitly rewards alignment so the composite reflects the conjunction, not just the average. A ticker bullish on quality but bearish on momentum gets a lower interaction score than a ticker moderately bullish on all three — the second case has more agreement, not more strength.
inputs · quality factor score (cross-sectional, standardised)
· value factor score (cross-sectional, standardised)
· momentum factor score (cross-sectional, standardised)
ideas · alignment: how strongly the three scores agree on direction
· disagreement penalty: how strongly they pull against each other
· multiplicative reinforcement when all three lean the same way
output · cross-sectional standardised score, sign-aligned (high → bullish)The exact alignment metric, the disagreement penalty curve and the multiplicative coefficient are calibrated and proprietary. Public: that the factor reads three independent inputs (quality, value, momentum) and rewards conjunction beyond the sum, in line with Asness-Moskowitz-Pedersen 2013 cross-class evidence.
Computed at scoring time from the three underlying factor scores that are already in stock_universe. No additional data fetch. Sits alongside the other factors in the composite blend. Influence is bounded — a single contradicting factor will pull the interaction score down sharply rather than letting two strong factors carry a borderline third.
Interaction amplifies the GROWTH REGIME ALIGNED confluence pattern (when quality + value + momentum all bullish in the same risk-on regime) and the QUALITY CRACK pattern (when momentum flips bearish on a quality + value name). It also dampens noisy single-factor signals — a ticker rated 90 on momentum but 30 on quality and 35 on value will not carry the same composite as a ticker rated 70 on all three. The factor is regime-conditional: alignment matters more in risk-on regimes when factor returns are co-moving, less in risk-off when correlations break down.
Interaction can over-penalise legitimate single-factor bets. A deep-value contrarian play (high value score, neutral quality, low momentum) is a real strategy in academic literature (Lakonishok-Shleifer-Vishny 1994); the interaction factor will score it low because momentum disagrees. The composite still surfaces it via the standalone value factor, but the interaction component will not. This is by design — we prefer to under-call single-factor opportunities than over-call them. The conformal interval widens automatically when the factor disagreement is large, so position sizing self-adjusts.
Every ticker page shows the per-factor decomposition. The Interaction score is one of thirteen composing the 0–100 the composite score.