Showing posts with label Google Trends. Show all posts
Showing posts with label Google Trends. Show all posts
Friday, April 26, 2013
Predicting the Stock Market using Big Data
In the paper Quantifying Trading Behavior in Financial Markets Using Google Trends researchers Tobias Preis, Helen Susannah Moat and H. Eugene Stanley have shown that an increase in activity of certain search terms from Google Trends correlates with a decline in stock prices in the Dow Jones Industrial Average (DJIA). The authors then compared investment strategies to show that the search activity isn't just a correlation, but can be used as a valid predictor of market activity.
This graph shows the DJIA on the left, and color codes 3 week periods in the graph according to search frequencies of the word debt. Note that red weeks, like late October of 2008 correspond with declines in the DJIA. So when lot's of people were searching for the work debt, the stock market went down.
The word Debt was the best performing term in the study. Notably , it performed better than terms like nyse ,nasdq, and dow jones.
The researchers then compared a Google Trends investment strategy to a basic Buy and Hold strategy and a random Dow Jones strategy.
The results were remarkable. The Google Trends strategy far exceeded the other strategies.
Subscribe to:
Posts (Atom)
Popular Articles
-
Cloud Computing has graduated from being a technology buzzword to being an essential part of any business or organization. Let's take a...
-
Today's Tech Talk Tuesday is virtual, we'll do a live one next week. Learn how to code with R like DataFrames in Julia. And see...
-
Visualizations Obtaining insights from Big Data requires new ways of looking at data. One of the most popular visualizations is the Tag C...
-
At the last Tech Talk Tuesday we took an overview of Python's Data Science related packages. The key packages for numerical...