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How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica

The claim of Cambridge Analytica, a political consulting firm, that it was possible to influence voting behavior by using data mined from the social platform Facebook created a sudden fear in its users of being manipulated; consequently, even the market price of the social platform was shocked.We pr...

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Detalles Bibliográficos
Autores principales: Peruzzi, Antonio, Zollo, Fabiana, Quattrociocchi, Walter, Scala, Antonio
Formato: Online Artículo Texto
Lenguaje:English
Publicado: MDPI 2018
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7512327/
https://www.ncbi.nlm.nih.gov/pubmed/33265853
http://dx.doi.org/10.3390/e20100765
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author Peruzzi, Antonio
Zollo, Fabiana
Quattrociocchi, Walter
Scala, Antonio
author_facet Peruzzi, Antonio
Zollo, Fabiana
Quattrociocchi, Walter
Scala, Antonio
author_sort Peruzzi, Antonio
collection PubMed
description The claim of Cambridge Analytica, a political consulting firm, that it was possible to influence voting behavior by using data mined from the social platform Facebook created a sudden fear in its users of being manipulated; consequently, even the market price of the social platform was shocked.We propose a case study analyzing the effect of this data scandal not only on Facebook stock price, but also on the whole stock market. To such a scope, we consider 15-minutes prices and returns of the set of the NASDAQ-100 components before and after the Cambridge Analytica case. We analyze correlations and Mutual Information among components finding that assets become more correlated and their Mutual Information grows higher. We also observe that correlation and Mutual Information are mutually increasing and seem to follow a master curve. Hence, the market appears more fragile after the Cambridge Analytica event. In fact, as it is well-known in finance, an increase in the average value of correlations augments the systemic risk (i.e., all the market can collapse as a whole) and decreases the possibility of allocating a safe investment portfolio.
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spelling pubmed-75123272020-11-09 How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica Peruzzi, Antonio Zollo, Fabiana Quattrociocchi, Walter Scala, Antonio Entropy (Basel) Article The claim of Cambridge Analytica, a political consulting firm, that it was possible to influence voting behavior by using data mined from the social platform Facebook created a sudden fear in its users of being manipulated; consequently, even the market price of the social platform was shocked.We propose a case study analyzing the effect of this data scandal not only on Facebook stock price, but also on the whole stock market. To such a scope, we consider 15-minutes prices and returns of the set of the NASDAQ-100 components before and after the Cambridge Analytica case. We analyze correlations and Mutual Information among components finding that assets become more correlated and their Mutual Information grows higher. We also observe that correlation and Mutual Information are mutually increasing and seem to follow a master curve. Hence, the market appears more fragile after the Cambridge Analytica event. In fact, as it is well-known in finance, an increase in the average value of correlations augments the systemic risk (i.e., all the market can collapse as a whole) and decreases the possibility of allocating a safe investment portfolio. MDPI 2018-10-06 /pmc/articles/PMC7512327/ /pubmed/33265853 http://dx.doi.org/10.3390/e20100765 Text en © 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
spellingShingle Article
Peruzzi, Antonio
Zollo, Fabiana
Quattrociocchi, Walter
Scala, Antonio
How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica
title How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica
title_full How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica
title_fullStr How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica
title_full_unstemmed How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica
title_short How News May Affect Markets’ Complex Structure: The Case of Cambridge Analytica
title_sort how news may affect markets’ complex structure: the case of cambridge analytica
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7512327/
https://www.ncbi.nlm.nih.gov/pubmed/33265853
http://dx.doi.org/10.3390/e20100765
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