Q&A: By analyzing media coverage, researchers connect public sentiment hedge fund returns

Economists have long used measures of public sentiment about the economy to forecast a wide range of key financial outcomes, like consumer spending and gross domestic product growth. Now, researchers at Penn State, Florida International University, the University of Cincinnati and California State University, Fresno, have used an artificial intelligence-driven approach that analyzes media coverage data and uncovered a significant connection between the public's perception of the economy and hedge fund returns.