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Exercise

Define and backtest a simple strategy

You want to create a strategy to trade the so-called "FAANG" stocks, which is an acronym referring to the stocks of the five most popular and best-performing American technology companies: Facebook, Amazon, Apple, Netflix, and Alphabet (a.k.a. Google).

The idea is simple, you will hold an equal amount of each stock in your portfolio. Every week the strategy will buy or sell shares as needed in order to balance the equal weights.

First, you will use the bt package to download the historical price data for the "FAANG" stocks by their tickers. Second, you will define the strategy, which specifies buying an equal amount of each stock, and rebalance every week. Lastly, you will run the backtest and plot the result.

The bt package has been imported for you.

Instructions 1/4
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  • Use the appropriate bt function to download "FAANG" historical stock prices from June 1st, 2020 to December 1st 2020, and inspect the first five rows.