Sentiment-Fundamental Divergence Methodology

How Arklēon detects sectors where market sentiment and underlying fundamentals are pointing in different directions.

Overview

Divergence is the gap between what a sector's news flow says and what its underlying numbers say. When the two disagree, the disagreement itself is the data point worth surfacing to a human allocator.

This page describes how that gap is measured. The divergence score is a measurement of the gap between news sentiment and fundamentals. It is not a forecast, and it does not behave uniformly across sectors. Arklēon does not promise that strong-fundamentals, weak-sentiment sectors will recover, or that the converse will sell off. Interpretation is left to the reader.

Architecturally, the divergence score is computed at read time.