Combining RavenPack Core News and Financial Times for Sector Rotation

Following our research on daily stock selection, we're sharing the next phase of our collaboration with the Financial Times. This time, we've taken the ensemble methodology that proved effective for picking individual stocks and applied it to a different challenge: quarterly sector rotation among U.S. equity sector ETFs.

This new paper introduces an innovative ensemble methodology that combines RavenPack Core News with Financial Times coverage to identify U.S. equity sectors with the strongest earnings-related momentum.

The results speak for themselves: since 2011, our Ensembled Top 2 Sector Rotation strategy has achieved an Information Ratio of 0.87, delivering 400 basis points of annualized outperformance relative to the Top 500 U.S. companies benchmark.

Ensemble Sentiment Signals

Why this approach works

The strategy leverages the complementary strengths of two distinct news sources:

RavenPack Core News provides comprehensive sentiment analysis from Earnings Growth events across our vast archive of normalized financial news, capturing broad market signals that have demonstrated a notable ability to anticipate sector rotation.

Financial Times serves as a signal amplifier - it brings its legacy of authoritative editorial standards and top-down macroeconomic analysis. The FT's sector-level insights help validate high-conviction opportunities and filter for the strongest consensus signals. The validation effect

What makes this ensemble particularly compelling is the recent strengthening of signal convergence. Since 2023, the Spearman rank correlation between Financial Times and Core News rankings has surged from 14% to 60%. This dramatic increase in alignment has amplified the ensemble signal and enhanced cumulative performance, suggesting that when these two rigorous but distinct analytical frameworks agree, the predictive power becomes substantially stronger.

A rigorous methodology

We combine RavenPack's +20 years of expertise in Natural Language Processing with our fully normalized archive containing billions of documents and world-class finance-oriented taxonomy. By integrating this with the Financial Times' comprehensive macroeconomic analysis and authoritative editorial perspective, we've created a systematic approach that captures both the breadth of market news and the depth of premium analytical insights.

The strategy employs a strict voting mechanism that ranks U.S. equity sectors quarterly by aggregating daily stock sentiment focused on corporate intrinsic value components: earnings, revenues, dividends, and assets. Sentiment is carefully weighted by sector-level market capitalization to ensure the signals reflect real market dynamics.

This quarterly rebalancing approach has consistently outperformed individual rankings across different portfolio concentrations, demonstrating the robustness of the ensemble methodology regardless of whether investors select the top two, three, or more sectors.

Download the full whitepaper to explore:

• Detailed backtested performance metrics since 2011
• The complete ensemble ranking methodology
• Sector-by-sector analysis and rotation patterns
• Implementation considerations for institutional portfolios