Alternative Data for Finance

Propelled by the explosive growth of the internet and mobile networks, digital data continues to grow exponentially amid advances in the technology to process, store, and analyze new data sources. The exponential growth in the availability of and ability to manage more diverse digital data, in turn, has been a critical force behind the dramatic performance improvements of machine learning (ML) that are driving innovation across industries, including the investment industry.

The scale of the data revolution is extraordinary: the past two years alone have witnessed the creation of 90% of all data that exists in the world today, and by 2020, each of the 7.7 billion people worldwide is expected to produce 1.7 MB of new information every second of every day. On the other hand, back in 2012, only 0.5% of all data was ever analyzed and used, whereas 33% is deemed to have value by 2020. The gap between data availability and usage is likely to narrow quickly as global investments in analytics are set to rise beyond $210 billion by 2020, while the value creation potential is a multiple higher.

This chapter explains how individuals, business processes, and sensors produce alternative data. It also provides a framework to navigate and evaluate the proliferating supply of alternative data for investment purposes. It demonstrates the workflow, from acquisition to preprocessing and storage using Python for data obtained through web scraping to set the stage for the application of ML. It concludes by providing examples of sources, providers, and applications.

This chapter will cover the following topics:

  • How the alternative data revolution has unleashed new sources of information
  • How individuals, business processes, and sensors generate alternative data
  • How to evaluate the proliferating supply of alternative data used for algorithmic trading
  • How to work with alternative data in Python, such as by scraping the internet
  • Important categories and providers of alternative data

..................Content has been hidden....................

You can't read the all page of ebook, please click here login for view all page.
Reset
54.210.83.20