We tried out Google’s new correlate tool (https://correlate.googlelabs.com) and found a secret correlation which could help investors time managed futures entries and exits:  beer and pizza! The new tool lets you run correlation analyses on a data set you upload against Google’s billions of records of Google searches. They have helped the CDC track flu epidemics with it already, and it’s probably only a matter of time before we read about a new hedge fund which will be using Google Correlate in conjunction with Google Trends to beat the markets.

Our curiosity got the better of us, and we uploaded Newedge’s CTA index data into the tool. While the highest correlation was for different variants of ‘log me in’ , there were some better ones (by better, we mean funnier).

Our favorites, with the correlation coefficient listed (out of possible high score of 1.0).

Search term                                       Correlation

“Sorry for your loss”                       0.9725

“pizza”                                               0.9710

 “Beer Blog”                                        0.9684

“la police gear”                                  0.9677

“89148” (las vegas zip code)        0.9674

Now, remember that correlation does not equal causation. We could theorize that pizza and beer were searched for more during the financial crisis and resulting years while managed futures were on the rise, and maybe there is something about the Las Vegas real estate bubble and managed futures being correlated. But sorry for your loss? And LA police gear?

Maybe it will be a while until we see that hedge fund based on this…