What is an 'S-Score'

An S-Score is a numerical value that shows how consumers and investors feel about a company, stock, ETF, sector or index as expressed over social media. S-Scores are created with data gathered by social media monitoring engines to help investors make trades and to help companies with market analysis and decision making.

Breaking Down 'S-Score'

In 2013, NYSE Technologies and Social Market Analytics created the first S-Score to be distributed over a high-performance global network, specifically geared toward the financial sector and designed to benefit trading firms, portfolio managers, hedge funds, risk managers and brokers. Along with its trademarked S-Score, SMA offers S-Mean, S-Delta, S-Volatility, S-Buzz and S-Dispersion indicators (together called S-Factors), to track the volume, change and dispersion of social media comments. Their system filters out irrelevant and duplicate comments and spam to focus on the 10% of comments that provide meaningful information.

S-Score Measurement

SMA's processing engine is comprised of three components: extractor, evaluator and calculator. According to SMA, the extractor accesses the API web services of Twitter and microblogging data aggregator GNIP. These sources are polled to glean commentary (in tweets) on SMA-covered stocks. This process is performed continuously. In the evaluator stage, each tweet is analyzed for financial market relevance using proprietary algorithms. The characteristics of the person making the tweet are also analyzed to determine intent. Finally, the calculator stage determines the "sentiment signatures" for each SMA-covered stock using a bucketing and weighting process based on timing. Then a "normalizing and scoring process" calculates an S-Score. 

An S-Score of greater than +2 is associated with significant positive sentiment, while an S-Score of lower than -2 is associated with significant negative sentiment. A score greater than +3 is considered extremely positive, while one below -3 is considered extremely negative. Anything between -1 and +1 is considered neutral. Higher scores could be also associated with higher Sharpe ratios, while lower scores could be associated with lower Sharpe ratios.

S-Score: How it is Used

Investors can use S-Scores to help them pick stocks. When S-Score changes, stock price is expected to change as well. Research by Social Market Analytics has shown that stocks with S-Scores higher than +2 significantly outperformed the S&P 500 over the period December 2011 through December 2013, while those with S scores less than -2 underperformed it significantly. As of January 2014, SMA computed S-Scores for all U.S. stocks with a meaningful amount of social media data. Examples include Whole Foods, Tesla Motors, Apple and Lululemon. 

RELATED TERMS
  1. Social Sentiment Indicator

    A social sentiment indicator analyzes aggregated social media ...
  2. Social Media

    Social media is a computer-based technology that facilitates ...
  3. Social Media Optimization (SMO)

    Social media optimization (SMO) is the use of social media networks ...
  4. Social Good

    A social good is an act that benefits the largest number of people ...
  5. Social Security Benefits

    Social security benefits are funds paid to retired workers who ...
  6. Social Responsibility

    Social responsibility is the idea that a company should not just ...
Related Articles
  1. Investing

    Fidelity Investments Shows How Social Media Helps With Stock Picking

    Social media sentiment can be used as a stock picking tool, Fidelity Investments says.
  2. Small Business

    Social Media: High Risk, High Potential Returns

    Carefully selecting social media ETFs can provide you with the opportunity to diversify your portfolio and enjoy financial rewards due to user growth.
  3. Small Business

    Implementing A Small Business Social Media Strategy

    As social media continues to change the way people communicate, it has become an increasingly important tool for small businesses.
  4. Financial Advisor

    Social Media ‘Don’ts’ for Financial Advisors

    Financial advisors should be aware of the many rules and regulations surrounding the use of social media in their practice. Here's a quick guide.
  5. Financial Advisor

    Why Social Media is a Necessity for Advisors

    There are a multitude of reasons why financial advisors should be on social media. Here are three of them.
  6. Financial Advisor

    6 Social Media Mistakes Advisors Should Avoid

    Financial advisors who are embracing social media as part of their digital marketing strategy need to avoid making these six mistakes.
  7. Small Business

    6 Ways Social Media Helps Home-Based Businesses

    The opportunities given to home-based businesses by the easy accessibility of social media are almost limitless.
  8. Financial Advisor

    The Most Successful Brands On Social Media

    What major firms have managed to take advantage of the massive monetizing potential presented by social media?
RELATED FAQS
  1. How is a simple moving average calculated?

    Learn about the simple moving average, how the indicators are used, and how to calculate a stock's simple moving average ... Read Answer >>
  2. Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to ... Read Answer >>
Hot Definitions
  1. Monero

    Monero is a digital currency that offers a high level of anonymity for users and their online transactions.
  2. Risk Tolerance

    Risk tolerance is the degree of variability in investment returns that an individual is willing to withstand.
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Initial Coin Offering (ICO)

    An Initial Coin Offering (ICO) is an unregulated means by which funds are raised for a new cryptocurrency venture.
  5. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  6. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
Trading Center