Using Sports Analytics to Make Better Traders

Your next video will start in

Recommended Videos

  • Info

  • Comments


March 12 (Bloomberg) -- Clare Flynn Levy, CEO of Essentia Analytics, and Bloomberg’s Jeremy Kahn, discuss performance based software for traders. They speak on Bloomberg Television's “The Pulse.” (Source: Bloomberg)

Trading performance, hiring performance, coaching and how to use software to gain an edge when it comes to making your portfolio work a little bit better.

Walk us through this talking about taking what has become common in sports into the hedge fund world.

Increasing number of fund managers and traders are trying -- turning to coaches to boost the performance to work on a whole range of issues, to sort of diagnose cognitive biases that may be affecting the performance and then work on improving the performance.

In doing so, they're also turning to new software, which can provide really in-depth analytics and how they constructed their portfolios and how they're making investment decisions, and combining the power of that software with the power of these coaches.

Data is critical him as bloomberg knows.

Let's talk about that data.

Our guests company uses the data to help investors uncover the hidden strengths to my weaknesses, how to trade more effectively.

There is some luck involved.

What you guys try and do is put that to one side and understand exactly what is going on and try to make -- exactly.

We're taking the view that if there's any luck involved in fund management, then the guy who maximizes his or her luck is the one that will win over time.

Nothing you can do -- sorry, if there is any skill.

There's nothing you can do about the luck art.

Skill, yes, you can.

What you need to know where it lies and what you can do to improve it and to maximize the energy.

What you provide is the baseline, the data that other people can then take and use to understand what they're doing right and wrong.

How easy is it to produce that data?

Is very easy.

The data is already being captured, i trading systems in the first instance.

Every time you do a transaction, you're capturing data.

You can start with data about what you did.

You can dig deeper into it thing for patterns around how you make and lose money.

We live in a world of big data and quantified self devices, measuring how many steps we take and how is it that night and all of that.

The data about the physical context and emotional context in which you are making decisions can be added into the mix, not to mention market data, of course, which is the environmental context.

In terms of the key metrics, what makes the difference?

We start with what i called your moneyball stats.

Like sports.

Goes to the movie about baseball players saying, there are basic steps you can use to tell whether you're any good at what you're doing.

Do you get it right more than wrong?

Right and wrong have different definitions depending on what are your benchmarks or absolute returns.

Do you get it right more than you get it wrong?

When you get it right, do you get a more right -- and that is critical, isn't it?

Both of those together are important.

You could be getting it wrong more often than right as long as when you do get it right, it is more right.

Ideally, you get it right more than wrong and you hit it harder -- the symmetry.

You can get it wrong a lot, as long as it is asymmetrical in terms of return, you're looking pretty good.

How important is this for the industry going forward?

This is prevalent you look at sports.

How important is this in the business community?

The data is growing in importance and there is more acceptance of the data.

Using the data with coaches, there are stills statement in the industrious associated with having a coach, but that stigma is declining over time.

The more forward-looking hedge funds and actively -- in the story we spoke to man group.

Raven how are has used coaches before.

There are some disconnect between the coaches in the data, but what is driving it is actively managed money in general is going through a bit of a crisis.

It has been since 2007 hedge funds collectively be the s&p 500 with positive returns, most actively managed neutral funds fall short of the benchmark indexes and that has driven a lot of money to the so-called alternative data switcher using algorithms to essentially match and then just eat an index.

-- just beat an index.

Coaches and the state is an edge.

Thank you very much, indeed.

Let me move you forward.

Let's go back to sports.

We take you behind the wheel of this formula one team.

It has produced its fastest, most extreme model for road car

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change