Exploratory Study on the behavior of the Brazilian Financial Market using Google Trends

Abstract

Search engines have changed the way people find relevant information on the Internet. It was suggested that investors use these Internet tools during the acquisition decision process and that the data sets generated by search engines are related to stock market movements. This study aims to analyze the relationship between this social phenomenon and the evolution of the Brazilian stock exchange. After previous studies, the correlation between Google's query volumes for terms related to a specific index of the Brazilian stock market (Ibovespa) and stock market metrics (opening, closing, high and low prices) was analyzed. The data showed a positive correlation between investor attention, represented by Google's search volumes and market prices. These results suggest that Google Trends data is more positively correlated to the highs of financial data, suggesting that investors tend to search more on the web when the market reaches its peak or vice versa. This article highlights the potential that this source of information has in understanding the Brazilian stock market.