Research preview

A magnitude‑6.0 quake struck Panama late on Friday, shaking the region and causing building damage. Such sudden, localized shocks provide a real‑world laboratory for testing asset‑pricing assumptions, liquidity‑cost models, and the robustness of systematic trading strategies. This article shows how quantitative traders can translate the event into actionable insights for portfolio construction and risk management. Event‑Driven Liquidity Shock When a natural disaster hits, market participants in the affected area often rush to sell local assets—equities of firms with exposure, sovereign bonds, or even regional currency. The surge of sell orders can widen bid‑ask spreads dramatically....