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(EMAILWIRE.COM, May 18, 2013 ) San Francisco, CA -- According to new scientific research, the terms individuals search for via Google's engine have been utilized by some to forecast the how stocks will react for the day. The same type of research that is used to predict travel, cold-season numbers, and other such predictors is now apparently useful for the financial market.
By using the Google Trend option, a service that has shown the popularity of search terms, the Warwick Business School of England and Boston University's department of physics have noted that the terminology found on Google for any given 7-day period can assist in the prediction of the Dow Jones industrial average.
“Quantifying Trading Behavior in Financial Markets Using Google Trends,” was recently published in Nature's Scientific Reports. The numbers were collected through the tracking of 98 terms using in Google Trends searches between 2004 and 2011. Some of the terms was somehow related to the financial market, such as: debt, portfolio, unemployment. Other terms were non-relatable, such as happy, politics, happy, and so forth.
One of the outcomes was that the word 'debt' saw an increase in sell-off of stocks. A decrease in such searches found that the market was able to rebound from previous lower days. It should be noted that the results did not take into account the volatile markets that involve large-scale sell-offs. Such dumps can force a tailspin of investors to abandon large sums of stocks in reaction to other larger dumps.
The Google Trends reactions are still inaccurate when information is not precisely calculated to predict the outcomes. This is true not only for the stocks, as seen in the Google Flu Trends study. The company predicted 11% of Americans had influenza, but the CDCP found that only 6% of the population was afflicted with the flue. Actions such as high-level news coverage, for instance, increased numbers of searches. This allowed individuals to better informed, and in fact avoid the flu more effectively.
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Source: EmailWire.com
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