You are here: Home - Investing -

Can Wikipedia predict the stock market? Computer says yes

Written by:
Online encyclopedia, Wikipedia, can be used to indicate future movements in the stock market, a new study has revealed.

Researchers from Warwick Business School in the UK and Boston University in the US used historical analysis of the site’s data to show that how often financially-related articles on Wikipedia were viewed was linked to future ups and downs in the Dow Jones Industrial Average.

The study looked at the frequency with which 30 pages that described companies in the index like Procter & Gamble, Bank of America and the Walt Disney Company were viewed and edited, between December 2007 and April 2012.

The findings found that increased views of these pages on Wikipedia were linked to falls in stock market prices.

The researchers then found that a simple trading strategy based on the views of those 30 pages related to Dow companies would have led to “significant profits” of up to 141%.

A similar strategy based on views of 285 Wikipedia pages on general financial topics would have led to staggering profits of up to 297%.

A buy and hold strategy, the researchers said, would have only brought in 3% profit.

Dr Suzy Moat of Warwick Business School said: “We know that humans are more concerned about losing £5 than they are about missing an opportunity to gain £5.

“If investors spend more time and effort gathering information before making what they consider to be a bigger decision, then we might expect to see people looking for more financial information before stocks are sold at lower prices, in line with our results.”

The same researchers also found that Google Trends and Twitter can also be indicators of stock market movements.

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Short-sellers burned again as Ocado soars 30%

Shares in online grocer Ocado have risen 30% this morning on news of a deal to provide fellow retailer Morrisons...