Data provider Thomson Reuters has enhanced its machine-readable news solution to help traders manage volatility in a more automated and efficient way.
NewsScope Event Indices (NEI), developed in conjunction asset management firm AlphaSimplex Group, enables clients to incorporate real-time analysis of key news events and trends into their trading strategies. According to Thomson Reuters, this will allow traders to more accurately predict returns in the face of market volatility.
“NEI allows us to express more abstract news and concepts in a format for machines and humans alike to understand,” Rich Brown, global business manager of machine-readable news, Thomson Reuters, told www.thetradenews.com. “Economic data, i.e. interest rate announcements, is easily processed by machines because it is generally numerical in nature and is released with a regular frequency and pattern.”
The offering is particularly targeted at hedge funds and investment banks that use quantitative-driven investment and trading strategies. It will be a component of the Thomson Reuters Quantitative and Event-Driven Trading solution portfolio and can be combined with market data distributed by Thomson Reuters.
NewsScope Event Indices create real-time indices, which react when abnormal amounts of news occur in various categories at various times. When the level of news reaches a certain threshold, a signal is sent to a customer’s trading or risk management system, alerting them to potential market movements. It can also be used in conjunction with trading models to help drive quantitative investment strategies and offers a historical archive for analytics.
“Users can conduct their own analysis using our event indices. You don’t necessarily need a black box to use this product and you can use it to highlight risk and identify where one might be over-exposed to certain events,” said Brown. “It doesn’t put traders out of work, but rather helps them increase their productivity and ability to comprehend how markets might move in response to various events.
They can then concentrate on higher value added services where a human should be engaged.”