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Does Anne Hathaway News Drive Berkshire Hathaway's Stock?

98 pointsby nirabout 14 years ago

13 comments

dewarrn1about 14 years ago
Well, correlation certainly isn't causation, but being a data-nerd, I had to take a look. I grabbed Anne Hathaway's web presence from Google Trends, and Berkshire-Hathaway's performance from Google Finance. After a little massaging, I dumped the numbers in to R, and there is indeed a reliable correlation between Anne's (per-week) web presence and B-H's weekly average close (or closest preceding close).<p>data: hath$AnneTrend and hath$BerkClose t = 4.6739, df = 373, p-value = 4.135e-06 alternative hypothesis: true correlation is not equal to 0 95 percent confidence interval: 0.1372140 0.3286587 sample estimates: cor 0.2352165<p>It's an R^2 of 0.23, which isn't much, but it's not completely spurious; Scarlett Johansson doesn't show the same pattern (there's a weak correlation, but not reliable at p &#60; 0.05).<p>Pearson's product-moment correlation<p>data: hath$ScarlettTrend and hath$BerkClose t = 1.7687, df = 373, p-value = 0.07775 alternative hypothesis: true correlation is not equal to 0 95 percent confidence interval: -0.01016440 0.19071018 sample estimates: cor 0.09120053<p>However, Scarlett's career hasn't mirrored Anne's all that well. What about someone a little closer to Anne, say, her Oscar co-host, James Franco? Note that apart from that, the two haven't really done anything together (<a href="http://imdb.to/g6vwbp" rel="nofollow">http://imdb.to/g6vwbp</a>), although I'd say they've both come to fame recently.<p>data: hath$JamesTrend and hath$BerkClose t = 4.5991, df = 372, p-value = 5.826e-06 alternative hypothesis: true correlation is not equal to 0 95 percent confidence interval: 0.1336854 0.3256934 sample estimates: cor 0.2319475<p>And that might be the clincher. James's little ups and downs shouldn't match Anne's, and yet his recent rise to prominence seems to share the same, slight relationship to B-K's stock value. Thanks for reading!<p>(edit: Ugh, awful formatting! Apologies.)
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andyleiabout 14 years ago
Is there life on Mars? I talked to an employee at NASA, and he said, "Probably not, but I guess its not out of the question". Then I wrote a story about it.
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grimoireabout 14 years ago
He used 6 dates:<p>Oct. 3, 2008 - Rachel Getting Married opens: BRK.A up .44% Jan. 5, 2009 - Bride Wars opens: BRK.A up 2.61% Feb. 8, 2010 - Valentine's Day opens: BRK.A up 1.01% March 5, 2010 - Alice in Wonderland opens: BRK.A up .74% Nov. 24, 2010 - Love and Other Drugs opens: BRK.A up 1.62% Nov. 29, 2010 - Anne announced as co-host of the Oscars: BRK.A up .25%<p>I'm not a statistician, but 6 dates could hardly be considered a correlation. I would also think that no Anne Hathaway news should result in no positive price changes for a correlation to exist.<p>Seems like the article confuses correlation with "funny coincidence".<p>And it certainly doesn't "drive" the stock, as the headline states. That implies a causation, which is even stronger than a correlation.
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mayankabout 14 years ago
No it does not. The linked article relies on a naive assumption about NLP and is devoid of any content.<p>To substantiate: entity resolution [1] is a widely studied research area in NLP, and it's fair to say that researchers aren't as naive in their methods as the linked article would suggest.<p>But even if naive "NLP" methods were being used, it would be silly not to mine the link structure of news articles (or sources) to disambiguate Anne Hathaway and Berkshire Hathaway [2]: there aren't too many news sources that mention both in the same article, and are outweighed by the ones that mention only one or the other (e.g., Us weekly vs. WSJ).<p>But even if there were some habitual false positives, no researcher or programmer worth their salt would unleash their mining algorithm on the whole web. More likely, you would target low-latency news sources like Bloomberg's financial feed.<p>So I would say, no -- anne hathaway news almost certainly does not drive berkshire's stock if text mining and NLP are the methods, and shame on the Atlantic.<p>[1] <a href="http://en.wikipedia.org/wiki/Name_resolution#Name_resolution_in_semantics_and_text_extraction" rel="nofollow">http://en.wikipedia.org/wiki/Name_resolution#Name_resolution...</a> [2] (PDF) <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.66.3235&#38;rep=rep1&#38;type=pdf" rel="nofollow">http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.66....</a>
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mynameishereabout 14 years ago
Anne Hathaway in the news == no news of importance.<p>News of importance == bad news == shares in general go down.<p>...but really, if you have a good theory, don't jawbone on it; open a brokerage account and make your fortune.
anigbrowlabout 14 years ago
The headline case seems highly unlikely, but there is a fund in London that trades on Twitter sentiment, an idea which sounds like something out of a Bruce Sterling satire. You can always sell shovels to traders and the media, though - hire a few PhDs and a graphic designer and crank out some infographics and popular attention is assured. Emphasize risk and caution regularly and sooner or later events will prove you to be a genius, at which point you can do an IPO.
MikeCaponeabout 14 years ago
BRK has a market cap of over 200 billion. To make price move significantly, there would need to be pretty big trades, no? If huge trades are made on the basis of random names mentioned online, that could explain a lot of our troubles with capital allocation...
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aidenn0about 14 years ago
It seems to me that if one algorithm did this, other algorithms would start to notice a correlation between Anne Hathaway news and BRK stock, so they would also want to buy when there is Anne Hathaway news. Something like this could easily "infect" large portions of NLP that way if there is insufficient damping in the system.
nostrademonsabout 14 years ago
These are pretty dumb traders if this article is true. Bigrams are not hard, and who the hell refers to Berkshire Hathaway as just "Hathaway".<p>More likely explanation: there're spurious correlations wherever you look, and The Atlantic just happened to run across one.
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kijikiabout 14 years ago
<a href="http://www.theregister.co.uk/2008/09/10/ua_bankruptcy_farce/" rel="nofollow">http://www.theregister.co.uk/2008/09/10/ua_bankruptcy_farce/</a> Suggests that this sort of automated text mining happens. Of course, it is from The Register...
Gaussianabout 14 years ago
File this one under "stupid data mining tricks."
clu3about 14 years ago
Oops, I always thought Anne Hathaway's father's name was Berkshire Hathaway
Confusionabout 14 years ago
Coincidence strikes again. Someone should convince journalists that correlation is not causation; not even when some other random fact happens to suggest a connection to our overly enthusiastic pattern-seeking minds.