A Data Mosaic approach to risk management can help identify emerging topics and narratives often missed by traditional approaches.
Sentiment data, along with other alternative datasets, is commonly used by asset managers to achieve market-beating returns, yet it remains widely underutilized within risk management. In this paper, we examine several examples of topical events that have impacted markets globally, and how news data can be incorporated within business practices to prevent and mitigate risk in real-time.
Specifically, we will unpack the following three takeaways:
- Risk practitioners are increasingly using a Data Mosaic approach to incorporate a variety of data sources into their risk modeling processes, including news analytics data.
- Many alternative data sources, such as news analytics, consistently add additional explanatory dimensionality into such mosaics.
- Constructing networks of related entities by searching for their co-mentions in the news can help identify hidden risks by association.
Compliments of RavenPack – a member of the EACCNY.