Practical Applications of Using Alternative Research Data in Real-World Portfolios

Practical Applications Summary

In Using Alternative Research Data in Real-World Portfolios, Herbert Blank (of Global Finesse LLC), Richard Davis (of Consumer Metrics Institute, Inc.), and Shannon Greene (of the Gabelli School of Business at Fordham University) discuss a potential strategy for investors hoping to incorporate alternative research data into their portfolios. Considering the overwhelming amount of data (currently estimated at over 20 zettabytes in cyberspace), as well as compliance issues associated with data usage, the authors suggest a lexicographic strategy—one based primarily on counting the instances in which a company or its brands appear on the Internet. By bolstering this strategy with a focus on industries where Internet presence is correlated with revenue or earnings, investment managers can use web-scraped data on intangibles such as brand loyalty to enhance their portfolios.

TOPICS: Exchange-traded funds and applications, analysis of individual factors/risk premia, big data/machine learning, portfolio construction