10 Best Alternative Data Providers & Sources for 2024

Looking to source some high-level alternative data to get an edge in the market? In this guide, we compare the 10 best alternative data providers for 2024.

We cover a wide range of alternative data methods, including satellite imagery, social sentiment, geo-location tracking, and much more.

The Top 10 Alternative Data Providers

In our view, the 10 best alternative data providers for 2024 are those listed below:

  1. AltIndex: Investors getting into alternative data for the first time might consider AltIndex the best option. It offers a free plan that comes with alternative data for cryptocurrencies and stocks. Some of the alternative data sets provided include social metrics, website analytics, market sentiment, and an AI-backed ranking score.
  2. Foursquare: Foursquare is one of the best alternative data providers for geo-location tracking. It monitors real-time foot traffic for over 50 million people via GPS, WiFi, and Bluetooth signals. Foursquare is ideal for insights into where consumers like to eat, drink, and shop.
  3. FlightAware: FlightAware offers alternative data for investors in the airline and supply chain spaces. Thousands of flights are tracked in real-time, providing insights on airline performance and cargo transportation. FlightAware is also useful for evaluating the overall sentiment of the travel industry.
  4. MetDesk: This alternative data provider specializes in advanced weather forecasting. MetDesk will appeal to investors from a range of industries, including oil and gas, soft commodities, and renewable energy. Alternative data is also provided for transportation routes, which provides real-time insights on supply chain movements.
  5. Plaid: Plaid is a top-rated alternative data platform for credit card transactions. It provides transactional data from thousands of banks and financial apps, allowing investors to assess consumer spending habits. Data includes the transaction size, category, amount, and location.
  6. Descartes Labs: Commodity traders will find Descartes Labs invaluable, considering it provides satellite imagery in the energy and agricultural niches. Descartes Labs also provides insights into its satellite imagery and claims to have a 90% accuracy rate when forecasting outcomes.
  7. SimilarWeb: SimilarWeb is an industry leader in website analytics. It provides alternative data on internet traffic trends, such as the number of daily visitors and bounces rates. Investors can make comparisons in key industries to find trending websites and brands.
  8. PatentAlert: This alternative data platform offers real-time alerts on newly registered patents. This can be useful in finding growth stocks with innovative inventions, or pharmaceutical companies with new treatments. Each alert links directly to the United States Patent and Trademark Office.
  9. Advan: Advan is a leading alternative data provider for foot traffic. It tracks millions of US consumers via WiFi and GPS signals and has partnered with over 1,000 apps. This provides real estate investors with an unprepared amount of data, covering metrics like migration, population growth, and income bands.
  10. SECFilings.com: This provider offers alerts when US stocks make filings with the SEC. This offers early insights into a range of regulatory metrics, such as insider transactions, legal filings, and updated company accounts. SECFilings.com is free to use.

Best Alternative Data Sources Reviewed

The 10 alternative data providers listed above specialize in a range of fields. This covers everything from patent and SEC filings to geo-location data, credit card transactions, and social media metrics.

Read on to discover the best places to obtain alternative data in finance.

1. AltIndex – Best Alternative Data Platform for Beginners 

While most alternative data providers charge high fees, Altindex offers a free plan. This makes AltIndex one of the best options for beginners. AltIndex supplies alternative data sets for stock and crypto investors making it one of the best AI stock picking services on the market in 2024. It covers thousands of data points, enabling investors to make smart, informed decisions. For example, once a stock has been selected, investors are presented with a range of social metrics.

This includes website traffic trends, in terms of daily visitors. AltIndex also provides information on Google search trends. This can be used in assessing the current sentiment of a stock or cryptocurrencies. We also like that AltIndex provides alternative data from social media accounts. For example, investors can find trending assets based on followers, likes, and community engagement.

Altindex review

This is in addition to ‘mentions’ on social media sites, including Reddit and Facebook. For instance, AltIndex informs us that Tesla has seen a 124% increase in Reddit mentions in the prior 24 hours. It conveniently lists other automobile stocks, such as General Motors (66%) and Ford (150%). This enables investors to make industry-by-industry comparisons with ease.

We also like the ‘job postings’ feature offered by AltIndex. This provides insights and trends into which companies are hiring – often a sign of strong financial performance. Based on our AltIndex review we found that it also provides information on new and existing patents. This can be a great way to find companies that have recently developed an innovative product.

Altindex review

While the sheer amount of alternative data provided by AltIndex can be overwhelming, everything is broken down in a digestible format. For instance, users can click on their preferred metric and view which assets are trending. Alternatively, AltIndex also offers summarized ranking scores for all of its supported assets. This is backed by AI and is based on all of its real-time data sets. Although AltIndex is free to use, there are limitations.

For example, the free plan comes with 20 daily visits and enables users to add two assets to their portfolio. It also comes with two stock alerts. The starter plan, at $29 per month, offers unlimited dashboard access, and up to 10 stock alerts. This is increased to 50 stock alerts when signing up for the pro plan at $99 per month. For unlimited access – including API fees, an enterprise plan is needed. Users will need to contact AltIndex for pricing.

Alternative Data Sets Provided Useful For Cost
Social media metrics on brand perception, mentions, likes, followers, and community engagement. Also provides data on job postings and Google searches. Alternative data on US-listed stocks and some of the best cryptos to invest in. Investors looking for an edge in the stock and crypto markets. Explore trends in real-time, rather than waiting for traditional data sources. The free plan comes with limitations. Starter and Pro plans cost $29 and $99 per month, respectively. Enterprise plan offers full functionality – contact AltIndex for pricing.

Pros pros

  • Overall best alternative data provider for beginners
  • Real-time data on social media sentiment metrics – including trends and mentions
  • Get insights on job postings, Google searches, and consumer sentiment
  • Offers alternative data on stocks and some of the best altcoins
  • Leading the way of best stock picking services in 2024
  • AI-backed ranking score on trending assets

Cons cons

  • The free plan is limited to just two stock or crypto alerts

2. Foursquare – Geo-Location Tracking on Over 50 Million Consumers 

Foursquare specializes in an alternative data method known as ‘geo-location tracking’. In a nutshell, the platform monitors foot-track in real-time via WiFi and BlueTooth signals. FourSquare is used by over 50 million consumers from more than 200 countries globally. It provides users with suggestions on where to eat, drink, and shop. By connecting to the Foursquare API, investors can obtain invaluable insights on consumer habits.

For example, Foursquare is useful for investors in the retail and hospitality industries. It allows investors to assess how many people are visiting specific establishments and for how long. Foursquare also provides reviews and ratings for each location, supplied by users of its app. Investors can evaluate which companies are worth keeping an eye on.

Foursquare alternative data

For instance, suppose a restaurant chain consistently scores high traffic and positive reviews around the world. This could highlight that the chain is about to report overly positive figures in its upcoming quarterly report. Moreover, Foursquare is ideal for identifying broader consumer trends. If more people are going out to eat and shop, this illustrates that consumers have a positive sentiment on the economy.

Foursquare can also be used by REITs (Real Estate Investment Trusts) to evaluate potential investments. For example, a REIT might be interested in a new residential complex location near a shopping mall. The REIT can use Foursquare to assess foot traffic and consumer spending habits to assess the complex’s potential. When it comes to fees, Foursquare doesn’t offer a free plan – but pricing is customized to the user’s requirements.

Alternative Data Sets Provided Useful For Cost
Geo-location analytics for over 50 million consumers in over 200 countries. Users are tracked via WiFi and Bluetooth signals, as well as reviews and ratings left when dining and shopping. Foot traffic data is useful for investors seeking insights into consumer spending habits and general movements. Particularly useful for investors with exposure to hospitality, retail, and commercial real estate. Users pay for the alternative data they require. Pricing depends on how many API requests are needed.

Pros pros

  • Get real-time data on over 50 million consumers from more than 200 countries
  • Find trends on where and when people are eating and shopping
  • Evaluate broader consumer sentiment and spending habits in local economies
  • Customizable plans based on the user’s requirements

Cons cons

  • Experience with significantly large data sets is required

3. FlightAware – Gain Insights Into Aviation and Supply Chain Trends 

While FlightAware is popular with aviation fanatics, it’s also one of the best alternative data providers for investors. Put simply, FlightAware offers real-time tracking on global flights – including commercial and private jets. This enables investors to gain insights into broader industry trends. For example, when flight numbers increase, this signals that the travel industry is doing well. This will bode well for investors with exposure to aviation and travel stocks.

Moreover, FlightAware allows investors to make informed decisions when buying or selling airline stocks. For instance, consider an airline that is consistently behind schedule or prone to cancellations. This could highlight operational issues within the company and a red flag for further troubles ahead. But if an airline is always on time or it is regularly adding new destinations to its schedule, this is a bullish indicator.

FlightAware review

FlightAware also offers alternative data on supply chain analysis. This is because FlightAware also tracks cargo flights. If a cargo flight carrying key shipments is delayed or canceled, FlightAware users are notified in real-time. Not only that, but FlightAware offers indicators on potential conflicts and no-fly zones before the mainstream media reports it. This can occur if planes are flying outside of their usual route to avoid a potential red zone.

We also found that FlightAware is used for private jet tracking. This can be useful in tracking the movements of blue-chip CEOs. In terms of pricing, FlightAware offers a free plan that comes with basic functionality. But investors looking for the most advanced and up-to-date insights will need to consider the Enterprise WX plan at $149.95 per month. This not only includes flight tracking but also real-time weather updates.

Alternative Data Sets Provided Useful For Cost
24/7 flight data on thousands of global flights, including commercial and private jets. Cargo plane movements are also tracked. Real-time updates on local weather conditions. Investors with exposure to aviation or travel stocks. Evaluate airline performance, broader industry trends, and supply chain efficiency. Also useful for identifying potential conflicts and no-fly zones. The free plan comes with limited functionality. Premium plans cost between $44.95 and $149.95 per month. The most expensive plan also includes real-time weather updates.

Pros pros

  • Analyze the performance of individual airlines – including flight efficiency, delays, and cancellations
  • Evaluate broader industry trends in the aviation and travel niches
  • Get early insights on potential conflicts through flight-path analysis
  • APIs and real-time alerts based on a wide range of metrics
  • Also provides live weather updates to Enterprise WX plan users

Cons cons

  • $149.95 per month to access full functionality

4. MetDesk – High-Level Weather Insights for the Commodity and Supply Chain Industries  

MetDesk is one of the best alternative data platforms for accessing reliable, accurate, and up-to-date weather forecasts. This alternative data method is hugely beneficial for commodity traders. For example, consider a commodity trader that specializes in corn futures. By using MetDesk, the trader can evaluate local weather conditions in major corn-producing regions. If MetDesk data suggests that severe storms or droughts are likely, this could negatively impact the corn region’s supply capabilities.

MetDesk is also used by investors in the renewable energy space. For instance, it provides indicators that can impact solar efficiency, such as irradiance forecasting. MetDesk is also useful for analyzing supply chain movements. For instance, suppose a MetDesk signal shows that extremely dangerous sea conditions are forecast in a key oil transportation route.

MetDesk review

While this could lead to supply chain interruptions, MetDesk gives investors plenty of time to trade the signal. MetDesk also enables investors to analyze other transportation services, such as aviation, railways, and highways. Crucially, users can set their own parameters on MetDesk, ensuring that only relevant alerts are received. MetDesk does not display its pricing structure on its website. Those interested in its alternative data sets will need to contact MetDesk for a custom quote.

Alternative Data Sets Provided Useful For Cost
Highly accurate weather forecasts, including drought, flood, and lightning warnings. Also provides data on renewable energy efficiency levels, including irradiance forecasting. Data is also provided for key supply chain routes, such as aviation, rail, and sea cargo. Commodity traders looking for insights on production yields and potential supply chain interruptions. Also useful for investors in the renewable energy industry. Prices are not displayed. Contact MetDesk for a quote.

Pros pros

  • One of the best alternative data providers for weather forecasting
  • Real-time insights for commodity traders and renewable energy investors
  • Discover potential supply chain interruptions because of adverse weather
  • Set up custom alerts to stay updated with relevant weather trends

Cons cons

  • Does not display pricing – custom quotes only

5. Plaid – Credit Card Transaction Data From Over 20,000 Banks and Finance Apps  

Plaid provides investors with an invaluable data set – credit card transactions from consumers in the US, Canada, the UK, and Europe. The platform has partnered with over 12,000 banks and 8,000 financial apps. This provides investors with a significant amount of alternative data, enabling them to evaluate broader consumer spending habits. Each credit card transaction displays the size of the purchase and the relevant category.

Plaid also provides the date and location of the transaction. Considering that millions of transactions are posted each and every day, Plaid allows users to set up their own filters and parameters. For instance, an investor with exposure to media streaming platforms might want alternative data on subscription payments. This provides early insights into whether stocks like Netflix and Spotify are seeing an increase or decrease in subscriber numbers.

Plaid review

Plaid is also useful for assessing consumer sentiment in specific countries and regions. For instance, an investor with exposure to retail and technology stocks might seek alternative data on discretionary spending. This refers to non-essential purchases. If discretionary spending is on the rise, this is good news for stocks in the retail and technology spaces.

We also like that Plaid allows investors to set up custom alerts. For example, an investor with exposure to a health and fitness ETF might want to receive daily alerts on gym subscription numbers. This enables the investor to keep tabs on broader industry trends. We found that Plaid offers a free plan that allows up to 100 transactions. But this won’t be enough to gain an edge in the market. For full functionality,  users will need to choose a custom monthly plan or simply pay for the alternative data they need.

Alternative Data Sets Provided Useful For Cost
Credit card and bank transaction data from over 20,000 financial institutions. Data is collected from consumers in the US, Canada, the UK, and Europe. Up to 24 months’ worth of data can be extracted. Investors looking for real-time industry and sector trends, plus consumer spending habits. Assess discretionary spending levels for insights into consumer sentiment. The free plan allows just 100 transactions. Monthly and pay-as-you-go plans are available, priced based on the user’s needs.

Pros pros

  • Credit card and bank transactions from over 20,000 banks and finance apps
  • Covers consumers in multiple countries – including the US, Canada, the UK, and Europe
  • Obtain trends on consumer spending – including discretionary purchase habits
  • Receive alerts on tracked categories – such as subscriptions

Cons cons

  • Users will need to be comfortable handling millions of data points

6. Descartes Labs – Satellite Imagery Data With Expert Insights and Analysis 

Investors with exposure to commodities might consider Descartes Labs one of the best alternative data providers. It offers commodity traders an invaluable source of information – real-time satellite imagery. This provides insights into a range of metrics, such as production levels, yield quality, and supply chain movements.  This is because Descartes Labs has satellite positions on major production and supply facilities.

For example, suppose Descartes Labs offers satellite imagery on a Russian natural gas facility. The image shows that a significant repair operation is ongoing, highlighting potential issues with production levels. This would enable the investor to forecast the supply chain interruption in their prediction model.

Descartes Labs

In another example, Descartes Labs can be used to evaluate the impact of a major natural disaster. For instance, after a severe storm in a crucial wheat-producing region.  Once again, this alternative data gives the investor real-time insights into supply chain forecasts. While the data will eventually be reported by the mainstream media, Descartes Labs provides commodity investors with a first-mover advantage.

Another benefit of using Descartes Labs is that it provides clients with daily research reports and trade strategies. The analysis provided is based on its satellite imagery and expertise in interpreting the data. The main drawback of Descartes Labs is that it is aimed at institutional investors and hedge funds. While prices are not displayed on its website, Descartes Labs will likely require a significant upfront investment.

Alternative Data Sets Provided Useful For Cost
Premium satellite imagery for a range of industries, including mining, agriculture, intelligence, defense, and energy. Daily reports and insights on satellite imagery data alongside potential trading strategies. Institutional investors and hedge funds with exposure to commodities and the military sector. Gain early insights on potential supply chain disruptions, conflicts, and severe weather. Prices are not displayed on its website. Contact Descartes Labs for a custom quote.

Pros pros

  • Gain an unparalleled advantage over the markets with real-time satellite imagery
  • Ideal for investors with exposure to commodities and the military sector
  • Receive daily reports and insights on new satellite imagery data
  • Discover potential supply chain issues or political unrest before the mainstream media

Cons cons

  • Aimed at institutional investors and hedge funds
  • Pricing is not publicly displayed

7. SimilarWeb – Real-Time Website Analytics and Trends for Online-Only Companies

SimilarWeb is one of the best alternative data providers for evaluating online-only businesses. For instance, e-commerce marketplaces like Amazon and eBay, or retail stock brokers such as Robinhood and SoFi. The reason for this is that SimilarWeb provides real-time insights into website analytics and trends. For example, suppose an investor is currently holding eBay stock.

eBay’s primary revenue model is based on marketplace sales, where it takes a commission from sellers. Through SimilarWeb data, the investor finds that the number of people visiting eBay has been on a declining trend for several weeks. This isn’t good news for the value of eBay stock – especially once the company reports its quarterly earnings.

SimilarWeb review

With this in mind, the investor might decide to sell their eBay stock holding before its poor performance is announced. SimilarWeb can also be used to get insights into wider industry trends. For example, websites can be ranked by the number of website visits in terms of percentage growth. If an increasing number of video streaming sites are trending upward, this could highlight positive growth for the industry.

SimilarWeb is also useful for identifying consumer sentiment on specific asset classes, such as cryptocurrencies. If the number of people visiting crypto exchanges is rising, this could signal increased interest from investors. SimilarWeb offers a free plan with limited access. Paid plans offer more features and increased search results, and start from $149 per month. SimilarWeb also offers a 7-day free trial on its premium plans.

Alternative Data Sets Provided Useful For Cost
Website analytics and traffic data. Key metrics include website visits, app downloads, bounce rates, trending industries, and competitor analysis. Investors with or considering exposure to online-centric stocks, such as e-commerce marketplaces, brokers, and the best crypto exchanges. Also useful for finding trending industries and niches. From $149 per month for a premium plan. A custom plan might be required for large-scale usage.

Pros pros

  • Leading alternative data platform for internet trends
  • Analyze website visits, app downloads, bounce rates, and more
  • Discover insights into online-only stocks that rely on website traffic
  • Explore which industries are trending to find niche investment ideas

Cons cons

  • The free plan comes with basic features
  • For unlimited functionality – a custom plan is required

8. PatentAlert – Stay Informed on New Patent Filings With Real-Time Alerts

PatentAlert is one of the best alternative data providers for staying updated with new patent filings. The platform offers real-time notifications when patents are filed with the United States Patent and Trademark Office. This can be useful for investors in many different sectors. For example, technology companies regularly file patents when they have created an innovative product.

This ensures that the concept can only be used by the respective company.  Similarly, patents are also filed by pharmaceutical companies when they discover a new drug or treatment. This gives investors a first-mover advantage, especially if the treatment is of significance.

Patentalert.com

PatentAlert uses an email subscription system that comes with a free plan. This offers up to 40 patent alert updates, but users cannot select the industries or markets they are interested in. For full functionality, consider upgrading to the expert service. This costs just $5 per month and enables investors to choose which alerts they receive. This can be done on an industry-by-industry basis, as well as from research centers and individual stocks.

Each alert receives a direct link to the United States Patent and Trademark Office. The main drawback of PatentAlert is that investors need to be well-versed in how to interpret patent filings. Patent filings often consist of dozens of pages of legal jargon, not to mention industry-specific terms and concepts. Nonetheless, notable patents can yield impressive returns – especially when filed by a small-cap company.

Alternative Data Sets Provided Useful For Cost
Real-time email notifications on new patent filings made with the United States Patent and Trademark Office. Users can decide which companies, industries, or markets they want to receive alerts on. Particularly useful for growth investors looking for companies with new inventions and concepts. Also ideal for pharmaceutical investors, as new drugs and treatments will always be patented. The expert service plan costs just $5 per month.

Pros pros

  • Real-time insights on patent filings made with the United States Patent and Trademark Office
  • Set up custom patent alerts on specific industries and companies
  • Discover new inventions and concepts before the broader market
  • The expert service plan costs just $5 per month

Cons cons

  • Prior experience of interpreting patent filings is a must
  • Notifications are only sent via email

9. Advan – WiFi, Bluetooth, and GPS Tracking for Real Estate Insights 

Advan is an established alternative data provider that specializes in geo-location insights. It tracks data from millions of Americans, largely via WiFi, Bluetooth, and GPS signals. To ensure data integrity, Advan has also partnered with 1,000 mobile apps, which provide more than 300 billion monthly data points. Advan is commonly used by real estate investors that seek up-to-date insights on local property markets.

For instance, Advan provides a range of useful metrics, including foot traffic, migration patterns, and population growth. It also covers employment data, including work-from-home trends. Advan packages all of these metrics together to give an ‘investment score’. This enables investors to assess the viability of a commercial real investment, such as office blocks, health facilities, or shopping complexes.

Advan review

Most importantly, Advan claims to offer a two-year advantage over census data. It also claims a historical accuracy rate of 98%, when compared to census figures. We also like that Advan protects user privacy, as it never reveals the identity of the people it tracks. It is also compliant with major privacy regulations, such as the GDPR and CCPA in Europe and the US, respectively.

Alternative Data Sets Provided Useful For Cost
Collects over 300 billion data points every month. GPS, Bluetooth, and WiFi signals track foot traffic in the US. Data is useful for assessing real estate trends, such as population growth and key housing markets. Real estate investors looking for an edge in the market, considering Advan is two years ahead of the census. Prices are not displayed on its website. Contact Advan for a custom quote.

Pros pros

  • More than 300 billion data points are collected from US consumers every month
  • Real-time data is obtained via geo-location tracking
  • Fully compliant with key data protection regulations – including GDPR and CCPA
  • Two years ahead of the official census

Cons cons

  • Most useful for commercial real estate investors only
  • Pricing is only offered after making contact

10. SECFilings.com – Set Up Real-Time Alerts on New SEC Filings

SECFilings.com is also one of the best alternative data providers for stock investors. Put simply, the platform offers a simple yet effective way to stay updated with key regulatory filings. There are many reasons why a US-based company might need to file regulatory papers to the SEC. This includes everything from executive compensation, quarterly earnings, and insider transactions to director changes and initial public offering (IPO) applications.

SECFilings.com

Crucially, with the exception of earnings calls – which are given to investors in real-time via audio, SEC filings will almost always beat mainstream media reports. For example, an SEC filing is required for ‘material events’. This includes a new acquisition or merger, which can have a major impact on the value of the respective stock.

A filing also needs to be made when a new debt offering is made. For example, if the company issues bonds – the SEC filing will detail key terms, such as interest rates. This information gives investors a huge advantage over the broader markets, which might rely on financial news and other traditional media. That said, the SEC handles approximately 3,000 new filings each day.

As such, this is an unprecedented amount of data for an investor to sift through. With this in mind, SECFilings.com enables users to select which companies or industries they want to receive alerts on. This enables investors to focus on the specific markets.

Alternative Data Sets Provided Useful For Cost
Alerts on new filings made with the SEC. Covers all US-based companies, including both private and public firms. Filing examples include annual reports, debt offerings, insider transactions, and legal matters. Investors looking for a major time advantage, considering filings are often made before traditional media reports the event. Especially useful for investors with exposure to US-listed stocks. Free

Pros pros

  • Track new SEC filings in real-time
  • Receive notifications via email on selected companies and industries
  • Beat traditional data sources – such as news reports
  • Free to use

Cons cons

  • The SEC receives several thousand filings per day – so investors need to niche down
  • Very basic website with limited features

What is Alternative Data?

Alternative data is one of the hottest trends in the investment space right now. But what is alternative data? Put simply, alternative data refers to information that is collected from unconventional sources. This gives investors an edge, as alternative data is rarely reported by mainstream outlets without a significant delay.

A simple example is satellite imagery. Suppose an alternative data provider obtains an image of an oil production field in the Middle East. The image shows that a major explosion occurred overnight, causing significant damage to the facility.

An oil trader might use this alternative data to buy futures. This is because the trader believes that once the news is reported by mainstream sources, the price of oil will increase.

This example highlights that the best alternative data platforms give investors a time advantage. And most importantly – an edge over other investors. This is also the case with other alternative data sources, such as patent and SEC filings, social media trends, and website analytics.

Alternative Data Examples

Let’s explore some examples of alternative data sets and how they can be used by investors.

Airline and Travel Industry Insights

Alternative data provides invaluable insights for investors involved in the airline and travel industries.

  • For example, suppose an investor uses FlightAware to get real-time data on flight departures and arrivals over the prior month.
  • After aggregating the data, the investor finds that a US-based budget airline is potentially running into operational challenges.
  • This is because when compared to the industry average, the airline has canceled a significant number of flights.
  • This is in addition to increased delays on key US routes. The investor decides to short-sell the airline stock.

A few weeks later, the airline revealed in its quarterly report that it is facing major staff shortages, which has resulted in increased delays and cancellations. On receipt of the news, the airline stock declined by 15% in one day.

This example shows that alternative data provides valuable insights that would otherwise not be made public until the company’s earnings report.

Demand Insights for Gold Traders

Alternative data sources are also ideal for precious metal traders, especially those involved in gold.

For example:

  • An investor obtains satellite imagery that shows a major gold mine is decreasing its scope in the region
  • This highlights that the gold mine is potentially running dry
  • Due to the size of the gold mine, the investor believes that this will have a positive impact on its global price
  • The investor decides to purchase call options on gold, to profit from a potential price increase

A few days later, a mainstream news outlet reports that the mine has completely seized operations in the region. The price of gold increases and the investor closes their options trade at a profit.

Social Media Metrics

Social media metrics and trends also provide valuable alternative data to investors.

For example:

An investor uses AltIndex to find top trending cryptocurrencies. AltIndex data shows that XRP is not only trending on social media but Google too. For instance, over the prior 24 hours, ‘XRP’ searches on Google have increased by 880%.

XRP price prediction

Data also shows that ‘mentions’ on Reddit and Twitter are trending upward, as is the number of news stories discussing XRP. The investor decides to buy XRP in anticipation of a bull run.

AltIndex also offers social metrics on thousands of stocks. In addition to social media followers, mentions, and engagement levels, it also provides alternative data on overall brand sentiment.

Consumer Spending Habits

Alternative data is also used to evaluate consumer spending habits.

For example:

  •  An investor uses Plaid for extra credit card transactions from over 12,000 US banks and financial institutions
  • The data shows that over the prior month, spending on discretionary products and services is on a prolonged decline
  • This could highlight that consumer sentiment on the economy is weakening, meaning people are reducing their non-essential spending

In light of this, the investor decides to short-sell stocks involved in the travel and retail industries. These are two industries that suffer badly when discretionary spending is down.

Real Estate Insights

Real estate investors will use alternative data sets for enhanced insights.

For example:

  • An investor uses Advan to extract alternative data on population growth and income bands
  • They find that a specific housing market in the South West is witnessing high growth rates and increased average salaries
  • This makes the housing market ideal for real investors, in terms of appreciation and rental yields

Crucially, the data provided by Advan is two years ahead of the official census. This gives investors a huge time advantage before the market catches up.

How is Alternative Data Faster Than the Official Census? 

  • Alternative data providers like Advan claim to be two years ahead of official census figures.
  • So how is this achieved? Well, the official census process is completely manual – with data collected on a door-to-door basis.
  • In contrast, Advan uses geo-location tracking methods, including Bluetooth, WiFi, and GPS.
  • It also collects data from over 1,000 independent apps.
  • This means that Advan can automatically obtain data in real-time.

Benefits of Alternative Data

The best alternative data platforms provide the following benefits to investors:

  • Timely Insights: Alternative data provides a time advantage for investors. This could be anything from a few minutes to several weeks. This gives investors an edge over the broader markets, as they can enter trades before relevant news is reported.
  • Risk Warnings: Alternative data offers one of the best risk-management strategies. After all, why wait for financial news outlets to report a potential issue? For instance, satellite imagery of an oil rig explosion will likely notify investors before traditional media outlets.
  • Trading Opportunities: Alternative data sources can also highlight new trading opportunities before the market catches on. For instance, suppose a pharmaceutical company files a new patent for a revolutionary drug. The trader is notified instantly via a patent alert service. They can then buy stock in the pharmaceutical company before the news is reported by the traditional media.
  • Independent Analysis: Retail investors have a habit of buying and selling assets based on other people’s advice – whether that’s financial news websites or media influencers. Alternative data sources promote independent thinking, enabling investors to make smart, informed decisions.

How to Pick an Alternative Data Provider?

Investors who are still unsure which alternative data platform is best can refer to the checklist below:

  • Privacy Compliance: Investors should ensure the alternative data platform is compliant with privacy regulations – especially the GDPR and CCPA. This is especially the case with geo-trackers that use real-time mobile signals.
  • Pricing: Some alternative data providers offer competitive pricing. AltIndex, for instance, offers a free plan. Those needing additional data can sign up for the starter plan at just $29 per month. However, many alternative data providers do not have a set pricing plan, as they are tailored to financial institutions. This often translates into hundreds of thousands of dollars per year.
  • ROI: Investors should also consider their projected return on investment (ROI) when using alternative data. The cost of obtaining the data should be a fraction of the projected upside.
  • Timelessness: Consider how much of a time advantage the alternative data platform offers. For instance, Advan offers population and migration data two years before the official census.
  • User-Friendliness: It is important to evaluate how user-friendly the alternative data is. For example, beginners likely won’t know how to handle millions of credit card transaction data – rendering it useless. AltIndex is ideal for beginners, as its data is aggregated into easy-to-understand score metrics.

How Much Does Alternative Data Cost?

The cost of alternative data will vary considerably from one source to the next.

For example, some alternative data sets are free to access. For instance, social media insights from AltIndex and flight tracking data from FlightAware. However, in most cases, users will need to purchase a subscription to remove limitations, such as transaction limits or advanced data.

Some alternative data providers do not have set pricing plans. This is because they typically deal with financial institutions, offering tailored solutions to meet their business needs.

Although estimates vary, a Deloitte report shows that back in 2017, $2-3 billion was spent on alternative data, largely by fund managers. GrandViewResearch estimates this will increase to $100 billion within the next seven years.

Conclusion

The alternative data market is growing at a rapid pace, with hedge funds, institutions, and now retail clients looking for an edge.

To get started with an alternative data platform today, consider AltIndex. Stock and cryptocurrency investors will find plenty of valuable data sets, from social media mentions and website analysts to overall brand sentiment.

References

https://www.uspto.gov/

https://www.cnbc.com/quotes/EBAY

https://www.sec.gov/edgar/about

https://www.census.gov/programs-surveys/surveyhelp/we-conduct-surveys.html

https://gdpr-info.eu/

https://www2.deloitte.com/us/en/pages/financial-services/articles/infocus-adopting-alternative-data-investing.html

https://www.grandviewresearch.com/industry-analysis/alternative-data-market

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Kane Pepi
Editor

Kane Pepi is an accomplished financial and cryptocurrency writer who has an extensive portfolio of over 2,000 articles, guides, and market insights. With his expertise in specialized subjects such as asset valuation and analysis, portfolio management, and financial crime prevention, Kane has built a reputation for providing clear explanations of complex financial topics. He holds a Bachelor's Degree in Finance and a Master's Degree in Financial Crime, and is currently pursuing his Doctorate degree, which focuses on investigating the complexities of money laundering in the cryptocurrency and blockchain technology sectors. Kane's wealth of knowledge and experience in the field make…