What’s the effect of news—good or bad—on a stock’s price? A recent study by data scientists at the Fed revealed that positive news stories increase stock returns quickly, but negative stories have a long-delayed reaction.
Specifically, positive news affects stock prices within a week. But, negative news predicts low stock returns for up to three months. And when a dozen of your portfolio companies generate a hundred news articles, keeping up with the data overload can prove impossible.
TipRanks’ Smart Portfolio now provides a tool for individual investors to monitor news affecting their stocks, enabling the combining this with other types of data sources to bring an edge to their specific strategy.
News and sentiment analysis has been part of the toolbox at hedge funds for several years. Using big data analyses, quants are sifting through millions of articles and identify a specific sentiment score or attitude for each one.
Forbes noted that the growth of data is steadily increasing, making it more attractive to use innovative analytics such as sentiment to generate alpha. “Our strategy is fundamentals based, and uses all sources of real-time fundamentals information (news, SEC filings, etc.), Igor Rivin, managing director of Samsara Investments, told the magazine last year.
In My Holdings, Smart Portfolio users can now see the Portfolio News tab that shows three categories: All Portfolio News; Bullish News; and, Bearish News.
The TipRanks financial engine sifts through thousands of news websites and pages to find, analyze and link relevant news stories. Algorithms detect words that relate to the particular stock, then grade the sentiment of these words and calculates the relevance and importance, resulting in a Bullish or Bearish categorization.
Along with News Sentiment functionality, Smart Portfolio integrates an existing online brokerage portfolio with other tools, allowing an investor to manage returns in real time using an automated investment adviser while maintaining individual control. Investors can compare their asset allocation, risk, dividends and more to other individual investors as well as track their holdings.
TipRanks’ News Analysis also powers NewsInvesting, a newsletter from SmarterAnalyst. The financial algorithm zones in on news articles with very strong bullish sentiment to generate a suggested portfolio of 10 stocks consistently beating the market. The algorithm is able to pick the most promising stocks using a buzz indicator, which checks if any particular stock is getting more coverage than it usually would. Buzz combined with sentiment allows the NewsInvesting algorithm to identify where to invest when.
To see more of what website Computerized Investing called “a new way for investors to track their performance,” take a quick tour of Smart Portfolio by clicking here.
