If you’ve been around this business for any length of time, you know that institutional salespeople and traders are constantly looking for an edge over the other guy – some obscure, under-the-radar opportunity to capitalize on a market imbalance, no matter how small or brief in duration. That’s why Dow Jones has partnered with Revere Data, a best-in-class research and data provider that specializes in analyzing connections within the marketplace, to help financial professionals get a comprehensive view of how a company creates and transfers value by revealing its interconnecting relationships. By linking these relationships to your trading strategy, you can find that elusive edge.

I sat down with Revere’s President and CEO, Kevin O’Brien, for a Q&A on the basics behind Revere Relationships™ and how our partnership with Revere creates some truly unique opportunities for users of Dow Jones news feeds. I hope you’ll find his answers as interesting and informative as I did.

RP: The institutional sales and trading community is familiar with the Dow Jones Elementized News Feed and Text Feed & Archive, so what does the addition of Revere Relationships™ mean for them? What can they do now that they couldn’t do before?

KO: The Revere Relationships addition opens up new, never before possible trading and hedging opportunities. While the Dow Jones news feeds allow clients to quickly be alerted of events on a minute-by minute-basis, Revere broadens the scope of those events to show companies that will likely be directly or indirectly impacted by them. This increased visibility of the connections within financial markets can be a tremendous advantage to investors, as they can now more accurately predict the consequences of a news item across additional baskets of stocks, or even sectors, with minimum possible latency.

RP: So can you really see a tangible impact on companies that are only tangentially related to a company that’s mentioned in the news?

KO: Ultimately all businesses within the universe are driven by other businesses in terms of supply, distribution, competition, or even industry confidence. Bad news for one company might lead to a poor quarter for another. Bad news for multiple companies could be the beginning of a downward trend. Failure to trade with this knowledge could mean lost potential revenue, or worse, high portfolio exposure to a crumbling basket of stocks. Revere Relationships demonstrates that news does not affect the company in the headline alone.

RP: Where does your data come from?

KO: Revere Relationships data primarily comes from SEC filings (10K/Q), press releases, company websites, and other sources. Revere’s analysts then review every relationship by hand to verify that it’s actually material and significant to that company’s business. A point of note is that the Relationships data feed includes not only which connections a given company declares, but also all of the ties claimed to it by other companies. These bi-directional references ensure more relationships are captured and with greater accuracy.

RP: Is this similar to tagging or metadata?

KO: Revere’s Relationships feed has some similarities with tagging and metadata. Tagging and metadata usually provide keywords which allow both machines and people to learn more about that individual entity. Our Relationships establish the competitors, suppliers, customers, and partners for each company traded publicly in the U.S. We then assign keywords to describe some of those relationships, along with quantifiers (such as percentage of revenue derived) which establishes the nature of that relationship.

Our data feed can be embedded in systems whereby the result would look very similar to tagging/metadata. In one situation, for example, an article could be written about a particular company. That article could then be tagged using the Relationships data so that recipients could find which other companies that particular article is linked to (and consequently, articles about those companies).

RP: What type of firms could take advantage of this data/relationship mapping?

KO: The combination of Dow Jones news feeds and Revere Relationships opens up potential across a wide swath of financial trading firms and even media companies. One major application is quantitative/algorithmic clients who are always looking to expand their baskets and evaluate new trading possibilities. The marriage of the Dow Jones news feeds and Revere Relationships would allow computer models in these cases to instantly calculate a tradable basket of related companies to an event that’s just been published on the wire (in milliseconds). Additionally, up to five years of historical data enables them to easily test theories.

In the finance sector, latency plays a major role in performance. If a desk trader has access to both feeds, then it’s possible for him/her to immediately make decisions on events as they occur without having to look up or cross-reference data. The Revere Relationships feed can even be tailored on the client side to include specific criteria for breaking down a company’s relationships for faster referencing. On the media side, consumers (financial or otherwise) demand access to information related to articles and reports they’re reading. With Dow Jones and Revere feeds in place, media outlets can provide not only the latest breaking, most reliable news on the markets, but can also use Relationships to intelligently locate other relevant content, thereby producing a competitive advantage.