Stock analysts vs. the crowd: Mutual prediction and the drivers of crowd wisdom

We examine the drivers of crowd wisdom in the financial domain by relating analyst report and social media sentiment via Granger causality (GC) testing based on the wisdom of crowds (WoC) theory. The significance of a large number of the tested time series indicates that analyst reports and social media content are suitable for mutual prediction. We elaborate on the conditions under which crowd cognitive diversity matters, and we derive related measures. The results suggest that the WoC theory can partially explain the GC between the two media types and that both professional analysts and the crowd can outperform one another under favorable circumstances.