Can Wikipedia Predict The Stock Market?

Wikipedia could have been used as early warning signs of stock market movements, according to a new study published today in Scientific Reports.

Researchers led by Dr Suzy Moat, Senior Research Fellow at Warwick Business School, found that changes in how often financially related pages were viewed on Wikipedia could have been linked to subsequent movements of the Dow Jones Industrial Average.

Their historic analysis detected increases in views of financially related Wikipedia pages before stock market falls.

Dr Moat said: “These results provide evidence that online data may allow us to gain a new understanding of the early stages of decision making, giving us an insight into how people gather information before they decide to take action in the real world.”

Wikipedia makes its contents freely available, and also data on how often people view and edit its pages.

Suzy Moat and Tobias Preis, of Warwick Business School, UK, along with Chester Curme, Adam Avakian, Dror Y. Kenett and H. Eugene Stanley, of Boston University, USA, looked at how often the 30 pages describing the companies listed in the Dow Jones Industrial Average, such as Procter & Gamble, Bank of America, and The Walt Disney Company, were viewed between December 2007 and April 2012.

They found that a simple trading strategy based on changes in the frequency of views would have led to significant profits of up to 141 per cent.

Similarly, a strategy based on views of 285 pages relating to general financial topics, such as macroeconomics, capital and wealth, would have also generated profits of up to 297 per cent. A buy and hold strategy during this period would have led to only a 3 per cent profit.

The researchers also measured how often these pages were edited during this period. No evidence was found that information on editing activity could have been used to anticipate stock market movements.

Preis, Moat and Stanley have previously found links between Google searches and stock market movements.

Click here to see the research paper Quantifying Wikipedia Usage Patterns Before Stock Market Moves published in Scientific Reports today.

Click here to download graph of Wikipedia Strategy on 30 companies on the Dow Jones.

Click here to download graph of Wikipedia trading strategy on 285 financial terms.