Alternative data is information from non-traditional sources that analysts use alongside conventional financial, market, or company data to identify patterns and support decisions. Common examples include satellite images, aggregated payment activity, mobile location signals, web traffic, product reviews, and job postings. The term is especially common in investment research, where these sources may offer a different or earlier view of business activity than financial statements and regulatory filings.
Using alternative data requires more than acquiring a new dataset. Teams need to understand how it was collected, whether they are allowed to use it, what population it represents, and how its meaning changes over time. For example, fewer mobile-location observations could reflect lower store traffic, a change in app permissions, or a different data provider. Alternative data is not the same as synthetic data or fake data. It comes from real-world activity, but its quality, legality, and relevance still need to be evaluated for the intended analysis.