Define: Look-Ahead Bias

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Definition: Look-Ahead Bias



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Full Definition of Look-Ahead Bias


Look-ahead bias is the use of information outside the time frame of the simulation period. For example, survivorship bias can be one type of look-ahead bias in a decade long study that excludes bankrupt companies. Look-ahead bias corrections can neutralize results that extrapolate back-tested historical portfolio results. If, for example, current quarterly earnings were not known when a simulation was run, look-ahead bias can be expected and better results found once the true earnings are known. Look-ahead bias is often cited in discussing hedge fund performance. Elimination or recognition of look-ahead bias for multi-period winner or portfolio performance persistence studies is an important factor in the accuracy of these studies. Look-ahead bias can also be an important factor in calculating or correcting fund liquidation forecasts.


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Definition Sources


Definitions for Look-Ahead Bias are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 1st April, 2020