Hedge funds identified the value of location data a few years ago. Until then, they would send someone to a big box retailer to count the number of visitors coming in and out, or count the number of cars parked, and make predictions based on this information. Location data now does the same automatically, with more sophistication, on a larger scale, and in real time.
Like a lot of alternative data, High-quality location data is valuable alpha for hedge funds and other financial institutions that invest in real estate and retail. By making Unacast available via the Bloomberg Enterprise Access Point, we provide hedge fund managers with geo-spatial points of interest and foot traffic metrics that are ready to be ingested into existing models to complement traditional data and inform decision-making in a range of scenarios, including:
- Modeling consumer behavior and forecasting future financial performance based on foot traffic and POI data;
- Evaluating and managing real estate asset portfolios based on migration patterns;
- Conducting trade area analysis for new investment opportunities;
- Leveraging property-level insights to build more specific insurance risk assessments; and
- Assessing sector and competitor performance.
Some of the more common scenarios where hedge funds rely on geolocation data from Unacast include:
- Retail property acquisition and development (check out our Site Selection solution);
- Optimizing office/retail leasing strategy (check out our Site Performance solution); and
- Competitive intelligence gathering and assessment (check out )
Why do hedge funds use location as an alternative data source?
Location data allows hedge funds and quant service providers on the Bloomberg Data Marketplace to analyze trends alternative data to identify trends in consumer behavior and foot traffic ahead of quarterly results announcements and after key campaigns. Location data also complements other alternative data sources, such as credit card transaction data, and helps hedge fund firms understand geo-distribution of customers
Some developing scenarios in the hedge fund space are more related to industry intelligence insights: e.g. measuring increased activity at oil wells, or around supply chain hubs. In each case, the quality of location data is of the essence, as it needs to inform hedge fund manager's trade decisions based on correct points of interest, tickers, and stable panels. Together, these alternative data points provide:
- The ability to create differentiated portfolios;
- Increase scalability of market predictions;
- Avoidance of crowded trade;
- Decreased risk of a short squeeze (A situation in which a heavily shorted stock or commodity moves sharply higher, forcing more sellers to close out their positions and adding to the upward pressure);
- Create new, custom economic indicators based on alternative data; and
- Connect the dots between different sources of data.
The exact application of location data and data type needed by Bloomberg Data Marketplace users varies depending on the hedge fund use case.
Hedge fund use cases for location data
A hedge fund can use Unacast’s location data for measuring retail traffic trends, detecting population changes, and for probing into additional insights around foot traffic performance as it relates to brands, venues and geographic areas.
Hedge fund managers place a strong emphasis on having historical data (a look back of at least one or more years to measure long term trends), as well as routine (e.g. monthly) updates that offer a consistent window to detect change and measure impacts. Thus, the attraction to alternative data providers.
Hedge funds also require a statistically relevant number of stable users for commercial visitation measurement, mapping to ticker symbols, and fresh venue data, including change in operational ownership (i.e. a Dunkin Donuts location becomes a Starbucks location). This helps to keep track of market leaders in a given location.
In another post, our Chief Technology Officer, Frode Bjerke, points out that there are really only three overarching use cases for location data across all industries: Informing decision making, Detecting change and Measuring change.
The first use case in the hedge fund industry is squarely in the camp of informing decision-making, specifically around different types of investments. One technique that is often applied by hedge fund managers is to use geolocation data to measure visitors to a given location as a proxy for how a business is performing -- not just in a specific location but across a franchise and in relation to the competition.
For example, a fund manager could use location data to examine migration patterns to discover emerging areas, with indicators such as net positive population growth and upwards mobility in terms of average income. In another application, the investor wants to look at foot traffic data over a given period of time around a series of custom points of interest, let’s say publicly-traded retail brand locations. In this scenario, foot traffic volume and trends versus other locations and brands help to inform the decision whether to buy, sell or hold that retailer’s stock.
In each use case, hedge funds can make smarter, more-timely decisions with a contextualized alternative data set from Unacast’s Real World Graph®. Unacast is the leading transparent and contextualized location data platform. We empower hedge funds by providing the most accurate understanding of human activity in the real world.
Transparency - No more black box data solutions. Unacast provides the source IDs and source categories behind all of our geolocation data feeds to our clients, so you can gain further insight into the audience and feel confident about the authenticity of your location data.
Accuracy - We put all of our data through a strict cleansing process that includes deduplication, fraud detection and the removal of corrupt data and bid stream data. We gather geospatial data across multiple providers to ensure an accurate, full view of a user’s activity.
Unacast offers hedge fund managers on Bloomberg Data Marketplace users two types of location data feeds, customizable based on client needs:
Visits dataset - The Unacast Visits dataset is a database of confirmed visits to known points of interest (POIs). The Visits data feed includes a timestamp, average lat-long of the venue, venue-ID, venue name, brand name, venue ID, city, state, zip-code, dwell time, SIC category, NAICS category and stock ticker. This dataset is a good fit for clients who prefer to work with location data that has been contextualized and thoroughly vetted on accuracy.
Pure dataset - The Pure dataset is an unfiltered stream of location and geospatial data that Unacast has aggregated from our suppliers. The Pure dataset includes a timestamp, the lat-long coordinates of the interaction, horizontal accuracy, IP address and source-ID. This dataset is a good fit for investment firms prioritizing volume, with the internal capabilities to attach POI, analyze and extract value from alt data in a raw form.
Neighborhood dataset - The Neighborhood datset describes foot traffic trends, traffic patterns and insights for Census Block Groups. These features are derived from billions of location signals per day sourced with GDPR, CCPA regulations, cleansed, processed and aggregated to Census Block Groups. The aggregates derived are extrapolated and supply corrected such that the features describe the US population.
Migration Patterns dataset - the Migration patterns dataset is a set of products for analysing shifts in population. Currently, the package consists of two datasets:
Home-based Origin-Destination Flux (OD Flux) derives moves from changes in home location of a device and therefore is able to capture the origin and destination of each move. In order to assess that a move happened with certain confidence, an observation window of several weeks (currently 8 is required, which means that our insights are more certain, however, come with a delay of approximately half of the observation window (4 weeks).
Population Distribution Trends (PDT) is a metric that measures the proportion of devices in each state or county at a weekly snapshot. When a mass of people moves from one area to another, the proportion shifts accordingly. This metric is useful for analysing the momentary situation, as it has no delay. Compared to OD Flux it doesn’t provide information about directionality of the moves or their permanency.
Unacast can help any hedge fund inform their alpha with alternative data and make better-informed decisions. Try Unacast Now for free to get started.