The Skopos Labs team of A.I. researchers, data scientists, software engineers, financial professionals, attorneys and policy experts developed a platform that predicts the impacts of policy-making.
Every day, for each U.S. company, Skopos A.I. estimates the level of positive or negative exposure that company has to recent policy proposals from the political parties. We use rolling averages of these underlying policy-company impact predictions to then automatically construct market-neutral long-short portfolios that isolate the incorporation of election information into securities prices. The portfolios are periodically rebalanced to construct the Skopos Political Indices using a purely systematic process.
In these interactive charts, the Republican portfolio performance in 2016 is displayed in red and the Democratic portfolio performance in blue. The portfolios captured post-election resolution of uncertainty very well.
These indices track the market's collective prediction of the election outcome and its effects on the market.
The performance of these indices tracked the market's current expectations about the electoral outcome in real-time in 2020 and allowed investors to take differentiated views or to hedge their exposures. The portfolios were rebalanced periodically to track new developments in the underlying data.