During more than a couple of our demonstrations to potential clients on the power of our unique data, we’ve been asked, “If your data is so valuable, why not just trade it yourselves?” This a great question. And, a piece of our answer is that generating meaningful returns from capital in the global markets is an extensive process requiring a fully robust complete team focused on the specialty of deploying capital. We know our clients are the experts at deploying capital in a robust and complex manner globally. The other component to our answer is that our core competency is the creation of insightful, reliable and actionable signals from market sentiment contained within unstructured data (primarily news). By focusing on our capabilities and core competency we enable our clients who are the experts at creating and implementing the best trading strategies to drive alpha and run the funds.
Our focus does not alleviate the need to create evidence of the results that could be attained with our data or provide guidance to our clients on how to achieve their investment goals. To further validate our data’s ability as a leading indicator, we set up a simple, yet powerful, trading strategy based on the assumption that significant changes in our Insight Index® could predict market movement. Trading only the S&P 500 long or short and using only our data as a signal, we returned over 22% annualized during our 2.5 year back test. With a few basic trading strategy implementations such as stop losses we’ve improved it to over 31% annually, and we know our clients can achieve even more powerful results!
To learn more about this example trading algorithm which utilizes one of the RelateTheNews proprietary sentiment indicators, the Insight Index®, review our white paper.