Datastream
In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) presents information referring to a global financial dataset, which plays a vital role in today’s financial markets for making informed investment decisions.
Introduction
Datastream is a global financial dataset that contains current and historical time series data on stocks, indices, bonds, funds, futures, options, interest rates, commodities, currencies, and economic indicators for 175 countries and 60 markets. It is accessible via two platforms: WRDS and LSEG Workspace.
It is an industry-leading analytical data source that enables detailed exploration of relationships between data series: perform correlation and relationship analysis, test investment and trading ideas, and research countries, regions and industries with time series sometime available from the 1900s onwards.
History
Datastream was developed by Thomson Reuters, now part of Refinitiv, and has been a vital tool for financial professionals for several decades. It has continually evolved to incorporate more data and improve its user interface, reflecting advancements in technology and the increasing demand for comprehensive financial information.
With over 35 million individual instruments or indicators across all major asset classes, including 8.5 million active economic indicators and over 14 million economic time series every day. It features 120 years of data, across 175 countries – the information and tools you need to interpret market trends, economic cycles and the impact of world events.
Its history extends as far back as the 1900s for G7 countries, the 1970s for other major markets and the 1980s for smaller countries.
Uses of Datastream
There are different uses of Datastream such as for investment research, economic analysis, portfolio management, academic research and financial reporting.
Investment Research
Investors and analysts use Datastream to research and evaluate potential investments by analyzing historical performance and financial health. Refinitiv offers in-depth coverage of more than 12,500 global companies across 74 countries, with over 630 metrics and history dating back to 2002.
For example, Refinitiv MarketPsych ESG Analytics (a part of Datastream) are real-time data series which can easily be incorporated into your investment and analysis process, whether quantitative or qualitative. Refinitiv MarketPsych ESG data is available on 100,000+ public and private companies and 252 countries and regions, covering more than 250 strategic ESG data measures, structured into 10 categories underlying the four areas of corporate performance.
Economic Analysis
Economists and policy makers use the database to monitor economic trends, make forecasts, and formulate economic policies.
Economists uses Datastream to access historical GDP data, inflation rates, employment figures, and other relevant economic indicators.
Portfolio Management
Portfolio managers use Datastream to track the performance of assets, optimize asset allocation, and manage risks of their portfolios or funds.
The risk manager uses Datastream to analyze historical price volatility, correlations between assets, and economic indicators that impact market risk. Datastream has had a number of marked firsts within the industry and was a pioneer when it came to calculating indices’ relative data on a daily basis. Thanks to their vast coverage of constituents across the major asset classes, users can construct benchmarks tailored to their respective strategies. This means a fund’s relative performance can be tracked more accurately.
Academic Research
Scholars and students in finance and economics use the extensive data for empirical research, thesis work, and academic publications.
Financial Reporting
Financial institutions use the data for internal reporting, regulatory compliance, and strategic planning.
Finance teams use Datastream to pull data on the company’s stock performance, compare it with industry benchmarks, and include relevant economic indicators.
Advantages of Datastream
To achieve their goals, Datastream is used by various entities and individuals for various reasons: comprehensive coverage, historical depth, user-friendly interface, reliable and timely data, and customization.
- Comprehensive Coverage: One of the most extensive databases available, covering a wide range of financial instruments and global markets.
- Historical Depth: Offers deep historical data, essential for long-term analyses and trend identification.
- User-Friendly Interface: Intuitive tools and interfaces for data extraction, charting, and analysis.
- Reliable and Timely Data: Provides accurate and up-to-date information, crucial for making informed financial decisions.
- Customization: Users can customize data queries and reports to meet specific research and analysis needs.
Challenges of using Datastream
Given that Datastream deals with real-time or near-real-time data, there are several challenges in processing the streaming data:
- Data Overload: The vast amount of financial data available can be overwhelming, making it difficult to filter relevant information.
- Data Quality: Ensuring the accuracy and reliability of financial data is crucial, as incorrect data can lead to poor investment decisions.
- Cybersecurity: Protecting financial data from cyber threats and unauthorized access is a significant concern for financial institutions and data providers.
- Cost: Access to premium financial data services can be expensive, posing a challenge for individual investors and smaller firms.
Conclusion
Datastream plays a critical role in the modern financial ecosystem. By providing real-time access to a wide array of financial data, it empowers investors, analysts, and institutions to make informed decisions, enhance market transparency, and drive economic growth. As technology continues to evolve, the accessibility and quality of financial data will only improve, further transforming the landscape of financial markets.
Why should I be interested in this post?
This article provides a comprehensive overview of Datastream, with clear examples and explanations of key concepts. For management students, understanding and analyzing the corporate world is equally important as being a part of it and making changes in it.
Related posts on the SimTrade blog
▶ Louis DETALLE The importance of data in finance
Other financial data
▶ Nithisha CHALLA Bloomberg
▶ Nithisha CHALLA Morningstar
▶ Nithisha CHALLA S&P Global Market Intelligence
Useful resources
LSEG Refinitiv datastream
Princeton University Library Datastream
Thomson Reuters Thomson Reuters Datastream Economics
NYU libraries Datastream Guide
European University Institute (EUI) Datastream description
About the author
The article was written in June 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).