Alternative Data in Trading and Investment
Long-term investors use alternative data to understand a company’s overall health and potential growth. While they may not focus on short-lived investor sentiments, they can leverage data such as social media engagement or advertising spend to predict future revenues.
Building Confidence in Alternative Data
Using alternative data requires confidence in its reliability. Investors must test the data against historical trends and benchmark performance to ensure it offers a consistent advantage.
Sophisticated investors often combine multiple alternative datasets, weighing them according to their track record and relevance. This systematic approach helps in making well-informed investment decisions.
- Alternative data serves both traders and long-term investors, aiding in decision-making processes.
- Building confidence in alternative data requires thorough testing and validation to ensure consistent insights.
- A systematic approach that combines multiple datasets and considers their weight helps in making more accurate and informed investment decisions.