Twitter is teaming up with S&P Dow Jones Indices to offer traders a broader view of opinions about corporations they could be contemplating investing in.
The S&P 500 Twitter Sentiment Index launched on Thursday to measure public opinion of corporations within the S&P 500 inventory market index. By way of the Twitter API, S&P analyzes each bearish and bullish tweets in actual time to attain the extent of optimistic sentiment surrounding every firm.
Conversations and opinions about corporations posted on social media have had an more and more vital influence on markets, as we noticed inearlier this yr, which noticed inventory costs surge as a result of particular person traders sharing info on social media platforms akin to Reddit.
“Social media is impacting the best way info is being conveyed to traders,” Peter Roffman, S&P Dow Jones Indices international head of Innovation and Technique, mentioned in an announcement. “Issue-based indices are a well-liked technique for passive traders, so we’re excited to work with Twitter to deliver this distinctive tilt to the S&P 500.”
The Twitter Index will measure the sentiment efficiency of corporations within the S&P 500 by analyzing tweets that point out the businesses’ $cashtag, which include their ticker image (akin to $TWTR), assigning a “z-score” that displays sentiment surrounding every firm. A coaching database is used to find out the probability that phrases in a tweet are optimistic or damaging, and filters are utilized to weed out spam tweets that would skew outcomes.
The index will measure the efficiency of the 200 corporations with the very best sentiment scores, bearing in mind float-adjusted market capitalization. A Sentiment Choose Equal Weight Index will monitor the efficiency of the 50 S&P 500 corporations with the very best sentiment scores.