If you are sitting in front of your three monitors in a financial institution, have you ever considered using travel data as an alternative data source?
Goldman Sachs Asset Management recommends in their Big Data Investment Approach that “to capitalize on the value of an investment you analyse a large universe of industry-specific data that extends beyond a company’s financial statements to determine its “intrinsic value.”
“True research success is not finding a new stock to invest in, but rather finding a new investment factor that can help improve the way stocks are selected. Investment factors should be fundamentally based and economically motivated, and the data assists in the empirical test on the investment hypotheses,” says Brad Schneider, CEO of Nomad Data.
So, what’s the connection between the travel data available at ForwardKeys and the future value of the stocks and shares you have in your current portfolio?
The Correlation Test
The Air Reservation, Seat Capacity, and Air Fares datasets with the rich range of analyses performed by ForwardKeys benefits finance firms and companies interested in monitoring global air traffic levels and/or visitor arrivals to their destination. Businesses that benefit from increased visitor arrivals to their destination includes the likes of theme parks, retail outlets, retail estate investments, airport holding groups, casinos, and more.
“By monitoring the fluctuations in arrival numbers using our data as a starting point, one can determine if the value of that stock will increase or not by looking at the arrival figures into the city or country in which that business is located,” says Antoine Vialle, Customer Success Manager at ForwardKeys.
“Our data can become a reference when determining future stock prices.”
Let’s share a few examples to paint a clearer picture and demonstrate the wins.
In this analysis, we looked at the number of people that are staying at a destination (information that is added to our dataset based on their arrival and departure dates) and the number of cars that have been rented out by car rental companies.
Our team first made a historical comparison, looking at which traveller profiles were the best fit to create a forecast. In this case, they found that travellers that stayed at least 2 nights in the desired destination were most likely to rent a car. The correlation was as high as 85%.
Results? We were able to substantially improve the forecasts used by the car rental companies.
2. Theme Parks
In this study, ForwardKeys looked at the attendance of visitors from the Philippines at a theme park in Asia to be able to provide accurate forecasts of how busy the park would be depending on the incoming tourists. We did so by comparing the attendance with tourist arrivals and overnights.
As a first step, we looked at which data point would be the best fit to bring into the forecast, while the team also looked at which traveller profile showed the most correlation.
The team found that most correlation was found with people visiting from one specific country, staying either between 1 and 8 nights and between 2 and 5.
Result? We were able to provide the theme park with a proper forecast that they could use to run their operations, and marketing campaigns to increase the number of visitors.
Find your Alpha!
Travel data clearly can unveil a new investment factor that will impact the future share price or stocks selected in a portfolio. That much-desired Alpha, “competitive edge”, over others.
“Our clients in finance have also told me that there is a strong correlation to our data to that of Forex Trading,” says Maria Rodrigues, Sales Director at ForwardKeys.
Other key selling points for our clients are the daily update with daily delivery and the fact that the data can be ingested in flat files via AWS/S3 buckets and Snowflake so hedge funds and portfolio managers can manipulate the raw data into their business intelligence tools and platforms.”
ForwardKeys is based in Valencia, Spain with offices in the UK, the Caribbean, South Africa, Singapore, China, Middle East, and Europe. We are truly passionate experts in data innovation and have been catering to non-finance clients for over eleven years.
Wanna chat? We are available for a call in your time zone.