Data Trends for Investment Professionals

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Email Receipts used to Forecast Amazon and Uber Revenues

This post is the first in a series called “Alternative Data In Action” (ADIA). Each article in this series will examine a different alternative dataset. We will discuss how the data is sourced, structured and, most importantly, some simple methods for leveraging the data for investment insight. This ADIA looks at electronic receipts. Data scientists Ray McTaggart and Lilian Lau contributed to this post.  The Dataset: Electronic Receipts in Email Where and when people spend their money is invaluable insight for everything from measuring the state of the economy as a whole to studying the success of a single product produced by a single...

The (Weak) Link Between Alternative Data and Inside Information

The alternative data business is an art and a science—in that order. The science—in the form of statistics—kicks in once our quant team gets its hands on a new dataset. There is of course plenty of creativity and innovation in this process: instincts honed from years as quants on Wall Street play a big role in guiding the research process. But the work is grounded in scientific discipline. Before any data mining can begin at all, the mine itself has to be found. Finding data that can potentially yield alpha is very much an art. It involves a continuous conversation...

An Interview with Vishal Goklani, Founder & CEO of METRICLE

Sentiment data and analysis has long been part of the toolkit of the successful investor. If you know what other people think about a stock, you can profit from their positioning. In the past sentiment had to be gleaned piecemeal from newspaper reports, anecdotes and personal observation. But in recent years, the internet has unleashed a flood of new sentiment sources, from real-time news websites to social media posts to self-published blogs and reviews. The first wave of internet sentiment analysis companies achieved success capturing this data and selling it to financial investors. Predictably, the market has been quick to assimilate...

A Taxonomy For Alternative Data

We're witnessing a data revolution. You all know by now that we've produced more data in the last 2 years than we have throughout all of humanity. And the pace is only increasing. It begs the question: how do you extract actionable trading signals from this brave new world of noise? It starts with understanding the landscape. Here is Quandl's take on the taxonomy of alternative data for finance.  

The Unbearable Transience of Alpha

In 2004 I enjoyed my 15 minutes of fame for an article I wrote called The Tao of Alpha, in which I explained the concept of alpha as a zero-sum game. Sources of alpha in 2004 were much different than those available in the mid-1990s when I started my career and they are also different from today's. Alpha is highly transient and has been coming and going for as long as capital markets have existed. The term “alpha” entered the vocabulary of Wall Street sometime in the 1980s, gaining widespread use in the 1990s with the proliferation of hedge funds.It...

Satellite Companies Moving Markets

Stop me if you’ve heard this one before: high resolution images taken from space now allow us to count cars in retailers’ parking lots, and therefore estimate quarterly earnings ahead of the street. Or this: we can use trigonometry to measure the shadows cast by floating oil tank lids and then gauge the world’s oil supply. Or this: we can monitor the vehicles coming and going from industrial facilities in China, and create a nascent China manufacturing index. Dozens of other possibilities exist, bound only by our ability to imagine what we can infer about markets based on high quality...

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