Thomson Reuters is adding "psychological analysis" to its machine-readable news service, interpreting the emotion and sentiment of stories and social media posts to help investors develop trading strategies.
Aimed at high-frequency traders, Thomson Reuters News Analytics scours and interprets information from around 50,000 news sites and four million social media sites.
The company has now teamed up with MarketPsych, a consultancy specialising in behavioural economics, to develop indices that claim to provide easy-to-interpret real-time psychological analysis of these stories and posts.
The Thomson Reuters MarketPsych Indices (TRMIs) are designed to enable users to view and model the impact of investor psychology across global asset classes and regions by analysing the specific attitudes expressed within stories and tracking the macroeconomic themes that are most relevant to price movements in each asset class, says Thomson Reuters.
The TRMIs are delivered to financial institutions as a series of real-time indicators that can be incorporated into charting and alerting applications or in quantitative models to help support asset allocation decisions and sector rotation strategies.
The indices are tailored to specific topics and asset classes and "reflect the levels of specific psychological dimensions expressed in news and social media such as optimism, gloom, joy, fear, trust, anger, innovation, violence, conflict, stress, urgency and uncertainty".
Rich Brown, head, quantitative and event driven trading solutions, Thomson Reuters, says: "Questions that are challenging to address can be answered directly using our MarketPsych Indicators and easily incorporated into investment and trading models. Questions like: 'Are there growing concerns over the stability of the Yuan's peg to the dollar, and what does this mean for the value of the currency?'...This new capability can be used to identify economic sector activity, asset prices, social trends and develop under-the-radar investment hypotheses."