Imagery analysis and machine learning meet Wall Street
To avoid high fees and lackluster returns, traders on Wall Street have begun using computer programs and analysis software in place of traditional human financial advisors. Big data collected from satellite imagery could give investors a considerable edge in predicting market booms and selecting which stocks to buy and sell.
As reported by a recent New York Times article, money management firms like BlackRock use complex data gathered by fleets of remote sensing satellites to gauge the strength of certain industries (such as oil) in specific parts of the world. For example, a computer might sift through swaths of satellite imagery to analyze the shadows of residential buildings in Switzerland. The steady growth or decline of those shadows over time might indicate the current health of Swiss real estate, and could direct cash flows toward or away from stocks in that market.
According to Satellite Today, Silicon-Valley startup SpaceKnow is an emerging leader in satellite image analysis. Their “China Satellite Manufacturing Index” tracks 6,000 areas of Chinese industry and uses satellite imagery of buildings, roads, construction sites, and more to reveal a complete picture of the Chinese economy. SpaceKnow leverages years of historic data to contextualize the satellites’ findings and draw the most accurate conclusions possible.
Thanks to advances in machine learning, SpaceKnow’s analysis is growing more automated; computers can simultaneously crosscheck disparate data sets to analyze recent industrial activity and predict future economic performance.
Major institutional investors have already begun shifting their money to hedge-fund firms that employ computer-driven trade techniques. Finance is naturally conservative, but perhaps this is a sign that the industry is beginning to catch up to modern technological capabilities.
Photo Credit: SpaceKnow and Mapbox/OpenStreetMap
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