Put Alternative Data to Use

Maximize Business Value

Asset management firms increasingly leverage alternative data to enhance their trading strategies with an informational edge over the market. As these firms continue to improve the effectiveness of their alternative data strategies, your firm will find it harder to distinguish its investment capabilities by using the same market data as everyone else, affecting your ability to attract new investments and increase assets under management.

Alternative data strategies mine new and unconventional data assets for market insights that are buried deep within traffic flows, satellite images, GPS locations, logistics, or public opinion. Value is derived from a combination of human intuition, subject matter expertise, data processing, and advanced analytics. To maximize business value, you need to move beyond traditional data platforms and business intelligence tools.

Optimize decision-making processes by leveraging sales data, mapping, aerial imagery, public records, and local market trends.

Inform decision-making with advanced analytics that evaluate financial stress, supplier stability, and ownership relationships.

Improve the Economics of the Strategy

The business value of alternative data assets is measured by how well they answer your team’s insightful questions, the ones that other investors have not thought of asking. However, the costs, time, and personnel resources needed to derive answers eat away at the bottom line. Improving the economics of a strategy is critical to generating alpha and attracting investment.

Modern big data environments such as data lakes process more varieties and higher volumes of data at a significantly lower cost than traditional data platforms. Native visual analytics increases the return on investments by enabling your team to drive the process, putting alternative data to use in a timely, secure, and collaborative way.

Keys to a Successful Alternative Data Strategy

Alternative data creates competitive advantage when the data fits your team’s unique angles in its fundamental analysis. To find valuable insights, you need the right technology that addresses your requirements. This starts with an analytics/BI platform that drives the key directives of your alternative data strategy.

Key Directives

Example Arcadia Data Capabilities

Let subject matter experts drive the process — not IT. Portfolio managers, quants, traders, analysts, and their teams are best equipped to derive meaning (and thus value) from new types of data. They understand the historical relevance of a topic and quickly discern nuanced disruptions that could flag an opportunity. Self-service tools that let them work on their own. Example capabilities in Arcadia Data include:
  • Instant visuals. Machine learning and rules-based recommendations provide a side-by-side display of the best visuals to use for a specified data set.
  • Single semantic layer interface. Non-technical users can easily add business meaning to the underlying data, to improve discovery, exploration, and collaboration among analysts.
Leverage all data, big or small. The subject matter experts must have the ability to explore and evaluate any type of data (structured, unstructured, real-time, or historical). Creativity is key to spotting and implementing new opportunities so they need to be able to play with it. Support for all data types. Correlate structured data, textual data (with search interface), streaming data (with pause and play), complex data types (arrays, maps, structs), combined real-time + historical data as/when needed to explore or test a theory.
Enable collaboration. The efficiency and efficacy of your team’s work increases through collaboration, leveraging the collective intellect of colleagues who can expand on an idea and investors who provide direct market feedback. Governed workspaces. Let colleagues share workspaces while maintaining security with granular access controls on sensitive data and column-level security.

Embeddability. Integrate into custom web apps with trusted authentication to securely share models with internal and external constituents and investors.
Ensure timeliness and data integrity. The informational advantage gained using alternative data diminishes as those sources become generally understood and adopted. To accelerate an informed decision-making process and staying ahead of the game, it is critical to ensure the integrity of the underlying data and to optimize the models that use it. No data movement to a separate BI server. All data and processing (including machine learning and AI) is directly accessible in the data lake and in its native format. Data integrity is ensured and time-to-insight accelerated because there is no data transformation overhead and teams collaborate on the same version. Data integrity is ensured because the data remains in its existing form with no disruptive ETL operations on it.

Enhance Investment Decisions with Alternative Data

See “Enhance Investment Decisions with Alternative Data” to see how conventional portfolio analysis can be enriched with:

  1. Sentiment analysis of social media
  2. Demographics and population growth
  3. Satellite Imagery
  4. Consumer segmentation
  5. Customer vitality

Derive Business Value at Any Step in the Big Data Journey

The mechanics of putting alternative data to use is presented below in six steps along the big data journey. Arcadia Data enables you and your teams to derive business value at any stage of maturity within your big data strategy, from exploring multiple data stores, to leveraging streaming data and advanced analytics, to optimizing how you share insights across your enterprise.

Evaluate new opportunities by correlating transactions patterns with business networks and product details.

  1. Ingest the data. The information you depend on will be coming to you via an array of live data streams and in large batches.
  2. Store the data. Huge volumes and high varieties of data from disparate sources will need to be combined and stored.
  3. Explore the data. Enable subject matter experts to correlate conventional and any type of alternative data types to flesh out ideas.
  1. Operationalize. Collaborate with colleagues across business functions to test and put your strategies into operation.
  2. Leverage streaming data and advanced analytics. Gain deeper and timely insight with streaming data and advanced analytics.
  3. Optimize. Improve the economics of your strategy by optimizing how you distribute data insights among teams and clients.

Connect Business Users with Big Data Capabilities

Visually analyze all types of data at a granular level from within the data lake, leveraging the native formats of both alternative and conventional data sets so your teams can collaborate on the same big picture. They will have confidence in the integrity of the analysis because the data hasn’t been translated (i.e., summarized/aggregated and then moved to a separate visualization server).

For the latest research on Alternative Data, read this new report available from Greenwich Associates

Alternative Data Research Report

Arcadia Data sponsored research with Greenwich Associates to examine how asset managers and hedge funds are finding, using, and benefitting from alternative data sources.

Read this informative report “Putting Alternative Data to Use in Financial Markets” to determine how the industry is finding new alternative data sets and putting that data to work.

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