Alphaworks
measuring irrational actions in the markets
What do we do?
Alphaworks measures irrationality in the markets.
We identify, measure, and track disinformation, misinformation, emotional discussions, and biased discussions about individual financial instruments. We use this information in together with real-time market data and company financial data to identify stocks that are displaying an irrational trading pattern. We call this measure the Rationality Index.
Rational stock movements are supported by information and analysis that provide a plausible explanation for the change (e.g., specific corporate actions, earnings reports, changes in competition, upgrades or downgrades, changes in economic or market conditions, etc.).
Irrational stock movements are those for which company financial information, market information, or economic information that could plausibly account for a change in price is outweighed by a collective emotion such as fear, biased information, disinformation, or misinformation.
Why is measuring irrationality of value?
Irrational market movements tend to be mean reverting. There is risk in Investing in instruments where price is heavily influenced by biased decision making, incomplete or faulty data, or directly misleading information intended to influence investors. Knowing when a price movement is irrational allows investors to better manage risk and to capitalize through different investment strategies.
When can I get the Rationality Index?
Alphaworks plans to produce a real time real-time Rationality Index for all securities traded on the NYSE. NASDAQ, and AMEX in the Summer of 2023. Check back for updates on our progress and sign up for our upcoming beta program.