Alternative Data
Alternative data sets are quite sought after in the quantitative investment management world. When everybody is using the same traditional metrics and means, competitive advantage lies in being able to outperform someone with a similar background. In the world of investment management, a novel approach is important to achieve this out performance. Dealing in margins, though, you do not need much of an edge to achieve significant gain. After all, a few basis points of a billion dollars is still a very large number. Having access to alternative data can help provide that margin.
Large financial institutions have started using their considerable resources to get expensive data sets. “Alternative data” is going mainstream as fund managers are projected to spend more than $1 billion this year to beat the market averages and stave off the rise of low-cost passive investing. (Source: www.marketwatch.com) This presents itself as an disadvantage to smaller financial outfits that may lack the resources to spend on data.
However, many new sources exist, some of which are free. For example, a tremendous amount of data is available with Google Dataset Search, a free tool for searching millions of publicly available data sets. With a simple keyword search, Google Dataset users can discover data sets hosted in thousands of repositories across the Web.
Scientific Financial’s Quotient platform levels the playing field. By providing a very flexible data integration and data management facility, it easily allows users to construct an extensive, diverse, and valuable data environment. It is like the international electrical outlet converter so well known to seasoned international travelers. Quotient allows you to work seamlessly with many different contexts and perspectives. If you want to stitch various data sets together, a lot of the messiness (like currencies, time frequencies) is handled for you by Quotient.