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Published by: BoardEx
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Alternative Data: Finding Correlations to Gain a Market Edge

Published by: BoardEx
Published on:
What’s the correlation between a company’s financial performance and the diversity of its board? Or if it splits the roles of CEO and Chair, is its stock price likely to rise? BoardEx clients are leveraging our people intelligence as “alternative data” to answer these questions and many more.

Here are a few questions to consider. Are companies with more women on their boards more likely to increase their dividends? Do businesses led by CEOs who are alumni of McKinsey or Harvard tend to outperform their competitors? Is a firm whose leadership teams include more members of diversity organizations likely to achieve faster sales growth? What is the effect on a company’s share price from the Chair and CEO being the same person? Are boards that regularly change their membership more likely to be successful than those that keep the same faces around the table (or, these days, on the Zoom call)?

These are all interesting questions – and a discussion on any of them could take up an entire article. They’re also questions that we at BoardEx don’t answer ourselves. But many of our clients in the investment community do answer them, by using our data. What they do is take our people-focused information about boards and leadership teams, and use it as “alternative data” in combination with traditional financial information. The result? They can identify previously hidden signals and correlations between leadership teams, financial performance and stock prices that give them an edge in the market.

What is alternative data: from satellite data to credit cards

While this opportunity has made BoardEx a well-established source of alternative data, the alternative data universe as a whole is much wider. So, what is alternative data – and what role does it play? BoardEx’s Ramy Sahadevan takes up the story. “Alternative data helps firms such as hedge funds, quant funds and traditional asset managers to create alpha,” he explains. “They do this by looking at out-of-the-box data points – beyond the “usual” information like a balance sheet and income statements – and combining everything to assess the trajectory of a company. Examples of this alternative data might include credit card data, satellite imaging, e-receipt data, mobile phone location data, corporate jet tracking, current/past employee reviews on websites like Glassdoor, web-scraping data from job posts on websites, and aggregated social media sentiment data, among many others.”

In fact, there are many well-known instances of alternative data being used to generate substantial value. For example, satellite imaging of how many cars are in retailers’ parking lots can give an indication of the current sales performance of their physical stores. Data on corporate jet travel between the locations of different companies’ headquarters have been used to get advance warning of an acquisition. Many of the games that people download to their smartphones generate anonymized location tracking data that hedge funds use to monitor consumer activity. And tracking of social media sentiment monitors the use of positive and negative words in relation to stocks. All of the resulting insights can be fed into investment decisions.

Harnessing the power of BoardEx

How does BoardEx fit into this landscape of alternative data? By providing our clients with people-based insights that can expose correlations between a firm’s management, board and financial performance. In this context, the fact that most other data providers focus primarily on the companies rather than the people running them puts BoardEx in a unique position as an additional layer of alterative insight – an advantage increased by the fact that the information on BoardEx is continually growing and is updated on a daily basis. The use cases for BoardEx as an alternative data source are also expanding all the time: they range from using BoardEx to assess the impact of female leadership on stock price; to examining how diversity correlates to stock performance; to assessing the implications for the stock price and dividends of board members sitting on multiple boards, of board members having large or small relationship networks on BoardEx, and of senior management and boards sitting on the boards of charities.

Significantly, while alternative data in general is usually more associated with hedge funds and quant funds, heavy usage of BoardEx as an alternative data source extends to traditional asset managers as well. Many look to streamline their processes and reduce their workload by using BoardEx for in-depth management analysis to understand the board and executives at a company, their backgrounds, the time spent there, what else they do and who they know. In this way, BoardEx’s wealth of people metrics and global team of 350 analysts help to free up fundamentals-focused investors to concentrate more time on their core strength: making investment decisions.

ESG and diversity come to the fore

An area where BoardEx data proves particularly valuable is in assessing the environmental, social and governance (ESG) aspects of companies. In terms of governance, are the roles of Chair and CEO played by two different people, or the same individual? And from a social perspective, is the company tracking and reporting on senior diversity? BoardEx’s Sabri Mejri comments that the diversity agenda is broadening all the time – and that BoardEx’s data is reflecting and supporting this shift. “We see more and more clients coming to understand that diversity is not just about gender and ethnicity,” he says. “It’s also about things like educational background, how young the board is in terms of experience, how they are connected to other organizations. All of that ties into the diversity of organization’s leadership. Our role in providing this data is to act as arbiters of people intelligence, presenting facts pulled from publicly-available information that our clients can then apply to their own unique business situations and needs.”

Over the years, BoardEx has been used many times as a source of alternative data to help researchers gain new insights into the drivers of corporate performance. One recent example was a research study published in the Harvard Business Review. It was an analysis of BoardEx relationship mapping on over 1,200 CEOs of S&P 1500 firms between 2000 and 2010, looking at their school, work, and leisure and social ties such as clubs and charities. The study revealed that those CEOs who had strong connections with people from diverse skillsets and demographic backgrounds tended to generate higher enterprise value. This higher value came from better innovations and M&As, underlining how the diversity of leaders’ social networks influences the way they grow their companies.

Supporting ESG initiatives

Here are just a few examples of the information that BoardEx can provide to ESG analysts to support social and governance analysis.


  • Percentage of female representation on the board
  • Percentage of board members with diverse backgrounds.


  • Determining whether a board member is independent
  • Whether the company has a split Chair/CEO role
  • Whether the CEO or other directors hold several board member positions at other public companies– are they ‘overboarded’?
  • How long board members have been with the company.

Exploring people and relationship intelligence

Looking across the various use cases for BoardEx as a source of alternative data, one thing comes across loud and clear: if any firm is looking to explore how leadership data and relationship intelligence can affect stock performance and corporate decision making, then BoardEx may be well-placed to help.