Dow Jones Formalizes Partnerships for News Analytics Portfolio

Dow Jones will this week announce a suite of sentiment analysis tools from the news provider and third-party vendors signed up over recent months, collectively dubbed News Analytics, that trading firms can use to develop strategies based on news and sentiment analysis.

News Analytics includes Dow Jones’ own Lexicon, an XML feed tagged with metadata that analyzes the tone of news items based on patterns of words used within each story, and Spanish sentiment analysis provider RavenPack—which Dow Jones has worked with since 2007, originally referring to that capability as News Analytics (IMD, April 23, 2007)—and over the past year has incorporated Los Angeles-based predictive analytics and text sentiment analysis vendor Alexandria Investment Research and Technology, Israel and New Jersey-based text mining and event analysis provider Digital Trowel, and Dutch semantic analysis vendor SemLab into the offering.

“One of the challenges in the area of news analytics is that people want to do things in different ways, and we didn’t want to limit people to one solution… so we wanted to embrace partners,” that could serve different client needs, says Rob Passarella, vice president at Dow Jones. “These companies… are generating interest in sentiment, and we think that will be reflective on us as well—if people are going to use them, we want to be the ‘Intel inside’ for sentiment analysis.”

Eugene Shirley, chief executive of Alexandria, says its contextual analysis lends its platform to multiple languages and asset classes, and was able to meet Dow Jones’ needs when clients from around the world wanted to use sentiment analysis to support trading in asset classes besides equities. “High-frequency and quantitative traders have a natural affinity for this, and our research shows these analytics can be effective for up to three months, for alpha generation and risk management, trading decisions and research,” he says.

Previously, client implementations of the vendor’s feed with these partners were done on an ad-hoc basis—such as with SemLab, which began working with the vendor four years ago on a project for a large bank client that wanted to capture the impact of news on its portfolios of equities, fixed income and foreign exchange assets, and was later contacted by Dow Jones about using SemLab’s ViewerPro application as an additional sentiment analysis tool for high-frequency and event-based traders, says SemLab CEO Bram Stalknecht.

“These companies… are generating interest in sentiment, and we think that will be reflective on us as well—if people are going to use them, we want to be the ‘Intel inside’ for sentiment analysis.” - Rob Passarella, Dow Jones

However, over the past six months Dow Jones has formalized the relationships to provide more structure around the joint sales and support processes.

For example, Digital Trowel—which provides visual interpretations of sentiment and highlights the source of sentiment in an article or other source of information, as well as in a feed for use in automated trading strategies—operates in other verticals besides financial markets, such as the pharmaceutical industry, so the partnership with Dow Jones allows it to leverage the news provider’s sales organization and expose it to a wider base of potential clients, while also giving its clients access to a richer and faster dataset than publicly-available sources, says Yoni Cohen, marketing director at Digital Trowel.

Passarella says Dow Jones is looking to recruit more partners into the News Analytics package, even if they are not sentiment analysis providers. “In the last three years, we’ve seen an enormous amount of correlation across markets, and people trading off headlines—and what used to be done by people is now moving to machines… because of the nature and volume of content and the processing power of machines,” he says. “So as this process becomes more mature, I’m sure we will have others [participate], and they may not exactly be in the sentiment space. They may be on different tangents but using Dow Jones news, such as complex event processing vendors.”