Can Social Media Data Offset Market Volatility?

It’s been a volatile time for the markets the last few weeks. Today especially – the Dow closed down 635 points; S&P, -80; NASDAQ, -175. While there’s no shortage of opinions on how/why the market will/will not recover, one thing is for certain – having the right data to make decisions is more important than ever.

Part of the reason for this is that the markets are clamoring for trends – definitive information on stock trends and market sentiment. Which is why it’s exciting to see how our finance clients are using the Gnip realtime social media data feeds. In a time of increased volatility, our hedge fund (and other buy-side) clients are leveraging social media data as a new source of analysis and trend identification. With an ever-growing number of users, and Tweets, per day, Twitter is exploding, and market-leading funds are looking at the data we provide as a way to more accurately tap into the voice of the market. They’re looking at overall trend data from millions of Tweets to predict the sentiment of consumers as well as researching specific securities based on what’s being said about them online.

While the early-adopters of this data have been funds, this type of analysis is available to individuals as well. Check out some start-ups doing incredible things at the intersection of finance and social media:

  • Centigage provides analytics and intelligence designed to enable financial market participants to use social media in their investment decision-making process
  • SNTMNT offers an online tool that gives daily insights into online consumer sentiment surrounding 25 AEX funds and the index itself

For the first time in history, access to (literally) millions of voices is at our fingertips. As the market continues its volatility, those voices gain resonance as a source of pertinent information.

Links & The Twitter Firehose

One of the more interesting components of Twitter streams are the links within the Tweets themselves. Not only are links one way to bridge from traditional web trend analysis, to social media, but they are also a window into what people are sharing.

Gnip provides three mechanisms to get at links in Tweets.

  • Link Stream. The link stream provides you with 100% of the Tweets that contain links. Furthermore, Gnip enriches the stream with unwound URLs, so you don’t have to bother with an unwind-farm on your end.
  • Power Track’s ‘has:links’ operator. Through Power Track, you can refine your complex queries (including substring matching) to collect only Tweets that contain links.
  • Power Track’s ‘url_contains:’ operator. The ‘url_contains:’ operator allows you to filter the 100% Firehose for Tweets that have links and contain the substring you provide. It filters against both short, and long, URLs.

Happy filtering!