Are you a data scientist who loves financial markets but doesn’t have access to clean, quality data? Or maybe you believe you have an edge in the stock market but don’t know how to be sure? Numerai is for you!
Build your model, submit your signals, and earn crypto!
Hedge Funds in Financial Markets
Two brains work better than one. That’s the idea of crowd intelligence and we can apply it to any domain. But when it comes to financial markets, this crowd intends to stay small. The reason is simple: it’s a highly competitive space and working together doesn’t make sense.
Hedge funds thrive on their unique investment strategy and the data they use to build it. They don’t like sharing either, because they need to keep their trading edge, the uniqueness of their strategy, to outperform other players. As a hedge fund, you can attract more customers only if you bring more profit to them than your competitors.
Now, let’s consider this scenario: you’re good at analyzing data and interested in financial markets. You were able to get your hands on some quality data and build a model that you strongly believe will perform well. Should you open your own hedge fund?
Well, the answer is not that simple. Besides the high costs, we have so many established hedge funds around the world and each has hundreds of employees working for them. How can you be sure that your model hasn’t been discovered by one of these funds yet? You know originality is key in financial markets.
Here’s where Numerai comes into the picture.
Numerai and Numerai Signals
Numerai aims to bring the crowd intelligence of data scientists around the world together to build a comprehensive model. Every data scientist without data can take advantage of Numerai data and help in improving its Meta Model. Meta Model combines all original models which users are betting on already.
In the previous section, we talked about a scenario in which you had a potential model but had no way to measure its originality. Numerai wants to solve this problem and become the only place for people to profit from their signals. That’s why it has launched Numerai Signals.
As for our previous scenario, you can simply submit your predictions (investment signals) in Numerai and see how they perform. Numerai has a unique way of analyzing your signals and their performance, risks, and profitability. It helps you to find the unique or original part of your signals and if you actually have an edge over other market players.
This can help you save money and time because you can start using your signals only if they actually are producing profitable results. In addition, every quantitative analyst, data provider, and even hedge fund can use Numerai Signals to analyze the originality of their signals.
What is the Numerai Tournament
Numerai Tournament is a great opportunity for data scientists and quants. It allows you to build a model based on the Numerai data and earn rewards based on its performance. Numerai provides a high-quality free financial dataset that has been cleaned and regularized. This dataset is encrypted in a unique way that obfuscates the data without affecting its quality.
Simply, you build a model based on this dataset and try to predict which stocks will have the best performance using your model. You then submit your predictions and Numerai will analyze them for you. If you feel confident after receiving the results, you can invest or bet on your signals.
To bet on your predictions, you have to stake (deposit) Numeraire (NMR), Numerai native cryptocurrency. Numerai will then invest in your selected stocks and you will earn/burn based on your model’s performance.
You can improve your ranking on Numerai’s leaderboard and build a reputation. According to Numerai’s website, it has paid almost $60M to its data scientists so far.
Endnote
Numerai is a platform for data scientists and quants to analyze their investment models and earn rewards based on them.
Numerai provides you with a high-quality financial dataset to build your model. You can then submit your model and analyze its performance, risks, and profitability. If your model performs as you expected, you can bet on it by depositing Numeraire (NMR) cryptocurrency and earn or even lose your investment based on your model’s performance.