Lev­er­ag­ing Data to Find an Edge

Whether on the golf course or in the mar­kets, the line be­tween star­dom and medi­ocrity is ra­zor-thin—and data anal­y­sis is a key dif­fer­en­tia­tor

Bloomberg Businessweek (Asia) - - NEWS -

When com­pet­ing at the top level in any­thing—es­pe­cially when money is in­volved—the dif­fer­ence be­tween be­ing king of the road and mid­dle of the pack is gen­er­ally minis­cule. Con­sider this stat from the PGA TOUR: At press time, the dif­fer­ence be­tween the play­ers ranked No. 1 and No. 30 in scor­ing av­er­age was a mere 0.946 (69.731 to 70.677), or less than a sin­gle stroke per round. Yet that dis­par­ity equated to a nearly $4 mil­lion gap in 2016 earn­ings be­tween the two play­ers.

Find­ing that edge is what keeps pro­fes­sional golfers awake at night. In the days be­fore Big Data came to the game, this largely meant re­play­ing rounds in one’s mind, try­ing to in­tuit pat­terns: Am I com­ing up short on ap­proach shots? Push­ing drives? Pulling putts? To­day, there is a more HIÀFLHQW ZD\ WR PDNH XS IRU WKDW ORVW VWURNH

Deep data dives

Us­ing ro­bust data technology, such as the PGA TOUR’s ShotLink Sys­tem that tracks ev­ery shot by ev­ery player in ev­ery round, the op­por­tu­nity now ex­ists to be far more ob­jec­tive about one’s per­for­mance. In golf, as in in­vest­ing, how­ever, the trick is fo­cus­ing on the mean­ing­ful data, rather than on mere noise.

“You want to look un­der­neath the scores,” says Mark Broadie, a Columbia Busi­ness School pro­fes­sor and a pi­o­neer LQ WKH ÀHOG RI JROI DQDO\WLFV ´<RX QHHG WR con­trol for other fac­tors to un­der­stand the in­for­ma­tion con­tent of the scores.”

Data an­a­lyt­ics has al­ready demon­strated its clear util­ity as a di­ag­nos­tic tool. Play­ers whose stats are weak in a cer­tain area— ap­proaches from 225–250 yards, for ex­am­ple, or right rough avoid­ance—now use this in­for­ma­tion to guide their train­ing and al­ter their prac­tice rou­tines.

Big Data isn’t only im­pact­ing tech­nique and psy­chol­ogy, but also course strat­egy. Whether on their own or with one of the num­ber-crunch­ing gu­rus begin­ning to ap­pear within the play­ers’ in­ner cir­cles, top pros are now ap­ply­ing data an­a­lyt­ics to de­cide, for ex­am­ple, whether to use a driver or a safer 3-wood off the tee on cer­tain holes, which pin po­si­tions on a par­tic­u­lar green to at­tack, or which par-5 holes are best at­tempted to reach in two shots ver­sus WKUHH³DOO RI WKLV WR ÀQG WKH VOLYHU RI HGJH on which out­per­for­mance rests.

Avoid­ing the rough in in­vest­ing

This strate­gic ap­proach is fa­mil­iar to 6WDQGDUG /LIH ,QYHVWPHQWV WKH ÀUVW World­wide Part­ner of The Ry­der Cup, the bi­en­nial match-play event be­tween the U.S. and Europe that will take place in Septem­ber at Hazel­tine National Golf Club, in Chaska, Minn.

Stan­dard Life In­vest­ments is well known LQ (XURSH DQG WKH 8 . DQG LQ WKH ODVW ÀYH years it has dou­bled its global client base, ex­pand­ing its foot­print to the U.S. and be­yond. Much of that suc­cess is due to an ap­proach that em­pha­sizes—like The Ry­der Cup—meld­ing highly tal­ented in­di­vid­u­als

into a co­he­sive unit that pri­or­i­tizes the pros­per­ity of the team.

“The Ry­der Cup fea­tures the best of the best play­ers, but in­di­vid­ual skills will not de­cide the win­ner,” says Jack Boyce, Stan­dard Life In­vest­ments’ Man­ag­ing Direc­tor of Dis­tri­bu­tion for North Amer­ica. “We be­lieve that work­ing as a team is what gets real re­sults, and is what drives in­vest­ment suc­cess.”

Where ama­teur golfers quake when con­tem­plat­ing a fear­some shot over water to a tiny tar­get, pros see the chance to VHSDUDWH WKHPVHOYHV IURP WKH ÀHOG ,QYHVW ment pro­fes­sion­als like­wise rec­og­nize the op­por­tu­ni­ties pre­sented by volatile mar­kets. Iden­ti­fy­ing mis­align­ments when fear reigns of­fers the chance to make money when oth­ers are keen to pull back.

“You need to iden­tify the right data to an­swer the ques­tion you’re in­ter­ested in,” says Jeremy Law­son, Chief Econ­o­mist, Stan­dard Life In­vest­ments. “There’s more data than ever to ac­cess, but not all data is true in­for­ma­tion con­tent. And that data means noth­ing un­less you can an­a­lyze it us­ing so­phis­ti­cated em­pir­i­cal and an­a­lyt­i­cal ap­proaches to tease out the true struc­tural re­la­tion­ships be­tween vari­ables.”

In try­ing to as­cer­tain the deeper con­nec­tions be­tween var­i­ous economic in­di­ca­tors and as­set re­turns, and how those cor­re­la­tions might be chang­ing over time, Stan­dard Life In­vest­ments con­tin­ues to de­velop its own an­a­lyt­i­cal tools. The com­pany’s pow­er­ful, SURSULHWDU\ ÀQDQFLDO VWUHVV LQGH[ IRU ex­am­ple, takes in vast amounts of mar­ket in­for­ma­tion—volatil­ity, credit spreads, liq­uid­ity, macro data, among nu­mer­ous other vari­ables—and sum­ma­rizes how the PDUNHW LV EHKDYLQJ (YHQ PRUH VLJQLÀFDQW­O\ it con­tains for­ward-look­ing in­for­ma­tion about how economies are evolv­ing and what the en­vi­ron­ment may look like over WLPH 2Q WKH IDLUZD\V DQG LQ WKH ÀQDQFLDO trenches alike, us­ing data to make sense of re­cent his­tory can lead to haz­ards avoided and a more pros­per­ous fu­ture.

“There’s more data than ever to ac­cess, but that data means noth­ing un­less you can an­a­lyze it us­ing so­phis­ti­cated em­pir­i­cal ap­proaches.” —Jeremy Law­son, Chief Econ­o­mist, Stan­dard Life In­vest­ments

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