Peer Shrinkage
A GNG technique that pulls a stock's expected return toward the average of its peer group when its own history is short or noisy.
Category: Methodology
What is Peer Shrinkage?
Peer shrinkage uses the company peer engine (text-embedding-3-small + hybrid scoring) to find similar tickers, then blends per-ticker estimates with the peer-group estimate. Helps for IPOs and small data sets.