News

Trader's Magazine: Avoiding the Herd in Overcrowded Alt Data

Mon April 22, 2019

Access full article

Also published in Tabb Forum, Finextra and Flextrade.

Fundamental investment managers are mining alternative data, but some worry that the same data sets have been sold to too many people and the strategies may be overcrowded.

Experts at a recent panel discussion on alternative data brought some clarity to how alternative data is categorized and what are the big challenges faced by fundamental asset managers, quants and hedge funds finding tradeable signals building models.

But some of the strategies are no longer as profitable as they were initially.

“There is no amount of alpha that exists forever and ever. Eventually it gets exploited,” said Erez Katz, CEO and co-founder of Lucena Research, an Atlanta-based predictive analytics firm. Lucena provides a platform that extracts actionable signals from data using machine learning technology. 

However, it is possible to prolong the lifespan of signals to buy or sell gleaned from alternative data, said Katz.