Tracking Coronavirus: How Data Can Help Chart the Peak-to-Trough

The coronavirus outbreak has injected extreme volatility into the financial markets, with the markets seeing their largest moves since 1987. As investors, we can barely model out our base case scenarios given the wide ranges of possible outcomes. We look to data to help drive our understanding of this outbreak and its potential for further impact.

Media outlets and investors have pointed to the number of new cases as a measure of tracking coronavirus mindshare. While this is useful data, it is based only on the small sample of people who actually tested positive for COVID-19. As is well known, there is a shortage of tests in countries like the U.S., and these official case numbers are significantly understating the impact of this outbreak.

To address this data gap and produce something useful for investors and corporations, we have looked at consumer interest in order to paint a more accurate picture of how the global population is thinking about coronavirus. Instead of looking at a few thousand known cases, this data is collected across panels of billions of people to give a more comprehensive picture. The Sentieo Coronavirus Tracker, helps us do this by combining mentions of coronavirus and related terms from millions of data points across:

  • Online search trends
  • Twitter mentions
  • News, filings, transcripts, and research reports

We’ve built visualizations of this data in the Sentieo platform using the Sentieo Plotter, which allows us to easily combine and normalize data from a variety of sources to support financial and corporate research, providing a unique opportunity to look at a large set of data in an easily consumable way. The full dashboard of these visualizations will be available to our customers in the coming day but here is a sneak peek of what we are seeing.

Sentieo Coronavirus Tracker vs. The S&P 500

Click to view the interactive chart.

The chart above shows that the initial rise of coronavirus mentions towards the end of February was ultimately associated with a vicious decline in the S&P 500 from March 3rd onward. Below, by applying this data against risk indicators like the VIX and credit spreads (BOFA Option-Adjusted Spread Index) we can see a direct correlation:

Click to view the interactive chart.

You might be thinking “So what? I already know the coronavirus has roiled financial markets. How will this actually help me?” However, there is still a lot more to understand about the current and future impact of this pandemic. The key for risk assets will be in determining whether we are at “peak” coronavirus, and how long it will take for conditions to normalize.

Coronavirus Tracker vs. Zika and Swine Flu

We can look to historical outbreaks for guidance on what a potential recovery path might look like. In the chart below, we took an average of Swine Flu’s and Zika’s historical search interest (yellow) and lined it up against COVID-19 trends (red). 

Click to view the interactive chart.

On average, Swine and Zika interest reached their peak levels of search interest 12 weeks into the corresponding outbreak (COVID-19 is currently in week 10), followed by an average of 12 weeks of recovery, which was in turn followed by another 12 weeks of significant interest. Projecting COVID-19 recovery based on the historical interest in Swine and Zika would theoretically imply the following:

  • COVID-19 searches could meaningfully increase to new highs over the next 2 weeks 
  • The “recovery” period post-peak could still generate very elevated interest in COVID-19
  • Interest in COVID-19 should continue to be high with trough levels being reached over the next 3-6 months

We can also apply more recent precedents of outbreaks relevant to COVID-19 itself. When analyzing the potential path for the United States, for example, it can be helpful to understand the peak-to-trough behaviors of countries like South Korea.

Global Coronavirus Search Trends

With global search trend data, we are able to track how often members of different countries are searching for coronavirus. When we look at trends within South Korea and Italy we can see varying lengths between the “peak” and “trough” coronavirus searches.

Click to view the interactive chart.

South Korea saw an initial peak in late January and another peak in early February, and now the country is about 7 weeks from its initial peak. Italy peaked in late February but saw another increase last week during its lockdown. Search interest in coronavirus is now declining from that peak.

Obviously, we do not know whether we are yet at peak here in the US and there are many reasons that the U.S. would have a different recovery path than China or South Korea—testing, lockdown measures, etc.—but once we reach the peak level of coronavirus fears, these countries could serve as a guide for understanding how long the recovery path for consumer sentiment will take. 

Coronavirus Impacts on Specific Stocks

This data can also help us understand how coronavirus is impacting single stocks. Zoom is seeing significant share price outperformance based on an expected increase in virtual conferencing needs. The data below shows that this optimism is warranted—the yellow line shows coronavirus mentions while the blue bars show Zoom’s YoY growth in U.S. search interest. Notice that Zoom saw a massive acceleration in the U.S. over the last few weeks, giving us real-time evidence that business is booming.

Click to view the interactive chart.

Businesses that rely on consumer spending and in-person experiences are clearly being hit, however. While there are thousands of stocks that are negatively affected by coronavirus, we show below how the rise of coronavirus (yellow) led to a significant deceleration in U.S. growth for Adidas (blue):

Click to view the interactive chart.

Within the Sentieo platform, you can find many more companies that are being impacted (negatively or positively) by the coronavirus outbreak.

Finding Certainty in Uncertain Times

The coronavirus has impacted the global population in a way no virus has before and has caused a great deal of uncertainty which has shaken the markets. We can find certainty in the things we do know. By combining datasets we’re able to build out models for this global pandemic—and chart a path to the other side. 

We hope this dashboard is useful for you and that the analysis was helpful. We’ll continue to track coronavirus and provide further analysis as things develop. Sentieo users can access the visualizations above in their Coronavirus Macro Dashboards. We will also be releasing a stock-specific dashboard to help you track which companies have been most impacted by coronavirus (e.g. Zoom above).