Information services provider Thomson Reuters, US, has expanded its news analytics service by including a new psychological analysis capability. Thomson Reuters MarketPsych Indices (TRMIs) is said to provide easy-to-interpret real-time psychological analysis of news and social media. Users can view and model the impact of investor psychology across global asset classes and regions by analysing the specific attitudes expressed within stories and tracking the macroeconomic themes that are most relevant to price movements in each asset class.
The analysis is projected to help gauge the market sentiment by analysing human emotion in news and social media in order to influence and support investment and trading strategies in financial markets. The aims is to offer multi-dimensional psychological analysis for machine readable news, including emotion and sentiment associated with specific countries, commodities, currencies and economic sectors.
Such a detailed level of interpretation is seen to help users to answer in-depth questions with quantifiable evidence to support specific hypotheses in a way not previously possible.
Developed in conjunction with MarketPsych, a consultancy specialising in behavioral economics, TRMIs are delivered to financial institutions as a series of real-time indicators. These can easily be incorporated into charting and alerting applications or in quantitative models to help support asset allocation decisions and sector rotation strategies. TRMIs are tailored to specific topics and asset classes and reflect the levels of specific psychological dimensions expressed in news and social media such as optimism, gloom, joy, fear, trust, anger, innovation, violence, conflict, stress, urgency and uncertainty. TRMIs also provide a set of metrics on common macroeconomic themes known to influence the prices of commodities and currencies, the growth of economic sectors, and the development of nations. For example, the feed quantifies such items as ‘CropDisease’ for agricultural commodities or ‘CurrencyPegInstability’ for foreign exchange markets.
TRMIs are seen as a natural complement to Thomson Reuters News Analytics (TRNA) as they provide a top-down view of market sentiment from a behavioral finance perspective relating to asset classes, sectors and countries. When the MarketPsych Indices are used in combination with the news analytics data, it is expected that users can better understand how the bottom-up signals in TRNA are affected by the psychological states of the market.
