Paper: arXiv 2212.05933

Authors: Alapan Chaudhuri, Zeeshan Ahmed, Ashwin Rao, Shivansh Subramanian, Shreyas Pradhan, Abhishek Mittal

Abstract

Nostradamus, inspired by the French astrologer and reputed seer, is a detailed study exploring relations between environmental factors and changes in the stock market. In this paper, we analyze associative correlation and causation between environmental elements (including natural disasters, climate and weather conditions) and stock prices, using historical stock market data, historical climate data, and various climate indicators such as carbon dioxide emissions. We have conducted our study based on the US financial market, global climate trends, and daily weather records to demonstrate a significant relationship between climate and stock price fluctuation. Our analysis covers both short-term and long-term rises and dips in company stock performances. Lastly, we take four natural disasters as a case study to observe the effect they have on people’s emotional state and their influence on the stock market.

Complexity vs Empirical Score

  • Math Complexity: 3.0/10
  • Empirical Rigor: 5.5/10
  • Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: The paper investigates an intriguing alternative data domain by linking climate, weather, and natural disasters to US stock market fluctuations. While the mathematical framework is relatively simple and relies mostly on basic correlation and statistical association, the empirical focus and case studies provide practical empirical exploration.

Research Flowchart

  flowchart TD
    A[Research Goal: Analyze Impact of Environmental Factors on Stock Market] --> B[Data Inputs: Historical Stock Data, Daily Weather, Global Climate Indicators & Disasters]
    B --> C[Methodology: Associative Correlation & Causation Analysis]
    C --> D[Computational Processing: Short-term & Long-term Volatility Tracking + Emotional Impact Case Studies]
    D --> E[Outcome: Demonstrated Significant Relationship Between Climate & Stock Price Fluctuation]