Text Analysis Links CFO Shareholder Engagement to Lower Volatility

  • Monday, January 8, 2018

Equities, Stocks, Central Banks, Investment Research, Analytics, Insights, Tradable Data, Signals

How can companies reduce their stock price volatility? Get their CFOs out of Excel and in front of analysts. That’s at least what recent research by Prattle, featured in CFO Magazine, indicates:

“The CFO is often thought of as a company’s calm, steady voice of reason amid all the noise generated by industry and market dynamics. And, it turns out, the more visible a finance chief is, the more likely it is that such a reliable presence will be reflected in the company’s stock price.”

Along with this research, the article also highlighted Prattle’s data as an alpha-generating trade signal:

“A third-party research firm, Lucena Quantitative Analytics, performed portfolio backtests using Prattle data to guide trading strategies. The backtests, which factored in realistic trading conditions such as transaction costs, involved ‘buying’ stocks of companies that Prattle scored as positive and holding them for one month before ‘selling.’

Applying that strategy to stocks included in the Dow Jones Industrial Average from the beginning of 2013 through mid-September 2017 resulted in a 112% return premium over the Dow’s actual performance. The same strategy, applied to the Russell 1000 stocks from the beginning of 2012 through mid-September 2017, scored a 44% return premium.”

Click here to read the full article.

The Prattle Team

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