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Alternative data in the search for alpha

Tim Harrington
Tim Harrington
CEO of BattleFin Group, Inc

The rise of alternative data in the search for alpha has been rapid. BattleFin CEO, Tim Harrington, explains how his company’s new ‘one-stop’ partnership with Refinitiv is helping to enhance the workflows of quants and portfolio managers.

  1. The integration of BattleFin’s alternative datasets on Refinitiv’s platform enables buy-side firms to vastly improve the consistency and quality of the data they use.
  2. BattleFin’s Ensemble marketplace delivers products and services that significantly shorten the time it takes to source, evaluate, and test alternative data.
  3. Nearly half of traditional investment managers say they are using alternative data in the search for alpha, with a further quarter set to do so in the next year.

The use of alternative data has quickly become a powerful differentiator in the search for alpha.

When collated and interrogated intelligently, the analytical and predictive insights derived from the data can give buy-side firms that elusive edge, enabling them to unearth signals and test investment hypotheses to spot where alpha exists.

A Lowenstein Sandler survey found that more than 80 percent of hedge funds are already using alternative data. But the data users aren’t limited to a select band of hedge funds and VC investors.

Alternative data offers powerful possibilities for everyone — and a rapidly growing community of buy-side users are taking advantage as they seek to make better investment predictions and strengthen their competitiveness.

Demand for alt data is rising. What's your plan? Alternative data in the search for alpha

Nearly half of traditional investment managers in a recent study by Greenwich Associates said they were now using alternative data, with a further quarter planning to do so by 2020. Mainstream managers’ budgets for alternative data are also up, climbing 52 percent in the last year alone.

As Greenwich notes, there is growing recognition that these new, unique data sources “can add valuable explanatory power to both quantitative and fundamental investment models.”

Strength in alternative data

Analyzing an alternative dataset by itself though is not enough to generate alpha.

To derive a strong signal and generate high confidence, you need context — a fundamental ‘baseline’ on which to establish the value of that alternative data. The answer is to marry alternative data with high-quality fundamental data.

That’s why BattleFin has teamed up with Refinitiv to consolidate data services and normalize data sets for both sides, all accessible within a single cloud-ready platform.

Easily integrate alt and fundamental data with Refinitiv and Battlefin. Alternative data in the search for alpha

The result of the partnership makes it easier for users to engage with and integrate this new content into their existing infrastructure, increasing the speed and efficiency of decision making.

Complementary data leaders

BattleFin serves as an alternative data marketplace, connecting firms interested in alpha-generating investment ideas. By combining BattleFin’s alternative data sets with Refinitiv’s unrivalled breadth and depth, our users have the opportunity to vastly improve the consistency and quality of the data they use.

We provide products and services that significantly shorten the time it takes to source, evaluate and test alternative data — helping the buy-side community to unearth the investment insights they need to succeed.

Data overload? Alternative data in the search for alpha

With the number of data sources proliferating exponentially, the information deluge can make it difficult for investors to spot those true data nuggets.

The real key to using alternative data lies in the question: “What do you want to know?”

BattleFin is not an investment advice oracle. Instead, it is a powerful resource for finding information that can answer these questions.

BattleFin runs a series of global Alternative Data Discovery Days that bring together buyers and sellers from the alternative data community in face-to-face meetings. The company seeks new and interesting data providers and connects them to motivated buyers.

BattleFin’s online Ensemble platform has grown out of these Discovery Days.

Completing the data puzzle

Ensemble is like a data terminal for users.

It handles data ingestion, monitoring, cataloging, authentication, security, and delivery for the data sellers, while giving buyers access to a comprehensive one-stop-shop of providers — allowing them to source, evaluate, test, and purchase multiple alternative datasets at will.

With Ensemble, investment firms can focus their budgets on buying data and hiring data scientists, not building an alternative data platform.

Our partnership with Refinitiv completes the data puzzle.

Refinitiv is a global leader in the fundamental data space, with a long-established reputation for exceptional data quality. It equips more than 5,000 investment firms and hedge funds around the world with best-in-class datasets, insights, technologies and expertise — spanning market data, pricing, company data, financial benchmarks, and indices.

Complete the data puzzle with alt and fundamental data. Alternative data in the search for alpha

Buy-side trading strategies

Refinitiv and BattleFin have the same mission: To generate alpha for the finance community.

Combining Refinitiv’s fundamental data with BattleFin’s unbeatable (and growing) collection of alternative data sources creates a powerful ‘network effect’, delivering the tools buy-side firms need to develop truly differentiated trading strategies.

Refinitiv’s introduction to the alternative data space also brings greater standardization to the industry. In particular, the seamless way Refinitiv’s Eikon and Ensemble allow data to be seamlessly incorporated into a workflow enables all buy-side stakeholders to access and leverage alternative and fundamental datasets more effectively.

Their shared Permanent Identifiers (PermID) are an excellent example of how this works.

By serving as open, permanent and universal identifiers, they act as a common language across different datasets, eliminating mapping inconsistencies, reducing operational risk and streamlining end-to-end workflow processes across various platforms.

Using alternative data in the search for alpha

The investment community increasingly recognizes the value that using alternative data can bring in identifying correlations and causalities. But finding, testing and using the data previously cost considerable time, energy and money. No longer.

Through BattleFin’s partnership with Refinitiv, we are meeting clients’ complex and evolving data needs — providing them with access to an industry-leading alternative data source alongside a full set of fundamental data, all accessible on Refinitiv’s QA Direct platform.

And as the sources of alternative data continue to proliferate, we will make it easier for new and relevant providers to bring compatible data to our clients.

Focus more time on research with access to a huge range of pre-integrated, standardized data from QA Direct