Innovative ways of visualizing financial data

Question

Finance is drowning in a deluge of data. Humans are not very good at comprehending large amounts of data. One way out may be visualization.

Traditional ways of visualizing patterns, complexities and contexts are of course charts and for derivatives e.g. payoff diagrams, a more modern approach are heat maps.

My question:
Do you know of any innovative (or experimental) ways of visualizing financial and/or derivatives data?

Answer 1

Visualization should lead to truth and understanding. As such, I find that simple visualizations tend to be the best. My favorite visualization for showing relationships is the scatterplot. Once you start to even introduce a line plot, you are implying continuities between data that may not exist. And trying to introduce more advanced visualizations like network diagrams (ex) or complicated pie charts (ex) can lead to more confusion than understanding if misapplied.

A few thoughts:

1. I think that you have already mentioned a few good ones. Heatmaps are good because they allow you to show three (or more) dimensional data without the added issues that arise when trying to create a 3D visualization. Payoff diagrams are simple but they accomplish their goal efficiently as a result.
2. The FinViz website has a few nice examples of visualizations, including a simple bar chart, candlesticks, and heatmap.
3. People often don't consider that it is possible to include more dimensions in a typical plot by changing the width, size, color, or intensity of a shape. This is a much better idea than trying to plot more than 2 dimensions spatially.
4. The fourth real dimension is time, and time plays a very important role in financial data. One popular way to incorporate this as another dimension in a visualization is through video. A great example is gapminder, the software created by Hans Rosling, which made for some very compelling TED talks about global poverty. This was acquired by google and is now available as part of their web toolkit (also mentioned by Ben Hoffstein).

Visualization techniques from other fields are still very appropriate in finance, and the best starting point is Edward Tufte, especially "The Visual Display of Quantitative Information" and "Envisioning Information". You also can get a benefit from learning a visualization language. I recommend any of these three (in order of complexity):

• R with ggplot2
• Protovis
• Processing

These each have a learning curve, but once you learn how to use them they all allow for exploratory data analysis in a way that can't be achieved with other tools.

There are also many great and innovative commercial tools. To mention a few that are all used by banks and hedge funds:

• Panopticon does an amazing job with real-time visualization.
• Tableau, Spotfire, and Qlikview all allow for interactive visualization of data using in-memory databases.

Answer 2

download gnuplot better then matlab , R and has almost every thing you will need It can also do everything mentioned in the other posts, and even visualize data in real time, at no cost as its open source and offers output to almost any format you want even LaTex for your thesis.

Answer 3

Nanex has an interesting way of showing the order-book:

The following images show CME's emMni future (S&P 500) depth of book and trades. The images are rainbow (ROYGBIV) color coded by the relative size at each depth level. Red indicates a lot of size, violet indicates size approaching 0. Note that a full minute before each event, the depth starts cooling rapidly. The volume of contracts traded is represented at the bottom of the chart.

More info here: http://www.nanex.net/Research/EMini1/Emini1.html

Answer 4

There are many price driven financial data finsualization concepts are available such as candle stick stock charts. However, there is an advanced charting concept, Mano Stick which is supply & demand driven charting concept. Mano Stick is a multidimentional charting concept which is able to display price information along with volume information to show trend changes in early statge.

Visit http://www.manostick.com/share-price-analysis.html. And see mano Stick at http://www.manostick.com/Images/MS-volume.png "manostick"

Answer 5

Shane's advice is good. I think it's worth adding the following two techniques not already mentioned:

Self-Organizing Maps (SOMs)

Seriation (pdf pertaining to R package seriation, but great intro to the topic).

They are not explicit visualize techniques, per se. Instead, they are algos that transform underlying data in ways that aim to lead to greater/new insight on the underlying data. Thus, in my mind, the above approaches share the common objective with xy plots, contour plots, scatter-plot matrices, heat maps, etc.

For strict quantitative visualization, Tufte, as mentioned above, a great place to start. Personally, I've gotten more out of Wong's, "The Wall Street Journal Guide to Information Graphics" and Janert's "Data Analysis with Open Source Tools". However, keep in mind that each have different audiences and objectives in mind.

I also believe Processing (mentioned by Shane) has a very bright future in finance - it's been used heavily by multimedia artists primarily because of its relative ease and great flexibility.

Answer 6

The Google Motion Chart is a particularly elegant visualization for 'replaying' time series data. There is also an R package to interface with it.

Answer 7

Here are a few recent examples:

http://stackoverflow.com/questions/4951193/find-largest-5-value-less-than-1-lowest-5-values

http://tables2graphs.com/doku.php?id=04_regression_coefficients#figure_6

http://tables2graphs.com/doku.php?id=03_descriptive_statistics#figure_5

http://chartporn.org/category/innovative/