Alternative data performance
Alternative data will likely transform active investment management (IM) over the next five years, from hedgefund management to long-only mutual funds, and
even private equity managers. Those firms that do not update their investment processes within that time frame could face strategic risks, and might very
well be outmaneuvered by competitors that effectively incorporate alternative data into their securities valuation and trading signal processes. The biggest opportunity for investors in this decade comes from the signals buried in the data generated by the digital economy. Alternative data is the deepest, least utilized alpha source in the world today.
Hedge funds, as with many of their counterparts in the financial industry, rely on data to formulate financial models to make investment decisions. The aim of any fund is to beat market consensus to realize better gains and grow the fund. However, the traditional datasets that are used to make these financial models are easily accessible and available to the entire cohort of hedge funds, thereby failing to give information that can provide a competitive edge.
Alternative data provides intelligence that is exclusive and allows to make forecasts and determine risks that cannot be derived from traditional datasets. It, therefore, provides fund managers with the ability to beat the market and generate alpha.
According to alternativedata.org research, to most valuable alternative datasets are:
It is often assumed that data drives the investment decisions of only quantitative investors, with fundamental investors relying on public company earnings statements. While this might have been true 20 years ago, today active long-only mutual funds rely just as much on data as does a global-macro hedge fund. Their strategies might be light years apart, but they are both chasing the same thing—alpha
Greenwich Associates report stresses that “the most forward-looking providers of alternative data are working tirelessly to tackle the buy side’s concerns. Data quality, completeness, cost, and accessibility are already improving. In many cases, further adoption requires both the potential consumers and those providing the data to create greater awareness of what’s out there and what you can do with it. This, though, is a double-edged sword. Alternative data will only be alternative for so long—eventually becoming a core part of any portfolio manager’s toolkit once the aforementioned roadblocks are taken down. Just as cloud computing is on its way to being called simply “computing,” private company, social media, and satellite data, among others, will also soon lose their alternative label. That said, each of the data sets and others will also evolve, constantly improving in an effort to provide an edge to those willing, able and informed enough to utilize the information.”
While alternative data has tremendous alpha generation potential, it is also an area most fund managers lack a depth of understanding. Collaborating with a provider able to decipher and deliver this untapped resource can help money managers to gain the necessary insights to this source of potential alpha.
Generating alpha using news sentiment and visual analytics
Using big data and text analysis technologies to generate alpha by collecting, structure and reveal hidden insights from unstructured text within tens of thousands of news articles, press releases, and financial social media. Our data is presenting on visually compelling, interactive dashboards on your PC, mobile or in real-time API.
Using a hybrid model to confirm the accuracy of data classification, context, and sources to ensure maximum value for our clients. Generating news sentiment score based on relevancy, position, and strength of the signal on any level. Furthermore, connect additional datasets to leverage your analysis and insights in your secure environment.
Cover press releases, news stories and financial social media on companies, currencies, commodities, central banks, cryptocurrencies, macroeconomics and ETF’s 24/7.
Our data is presenting on easy to use interactive dashboards on the web or on your phone, get alerts when data changes, and drill into details. Furthermore, add any datasets to leverage your analysis and insights in your secure environment. Alpha is at your fingertips.
Low latency API, clients plug in our API into their existing application to leverage their investment and risk models.
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