Twitter (X) Sentiment Off to Hot 2025 Start, Outperforming the Market

Context Analytics (CA) is the leader in processing and structuring textual data for sentiment analysis. CA ingests data from a variety of sources including X (formerly Twitter). CA grades the sentiment from X tweets on a scale of -1.000 to 1.000, aggregates them over a 24-hour period, and compares it to a historical baseline of 20 days to create S-Factors. The S-Factor feed is one of Context Analytics' longest-running products and includes the S-Score, which is a description of how positive or negative sentiment is by security.

When the S-Score is higher, that means the exponentially weighted sentiment from the previous day is higher than the previous 20-days. An extremely high S-Score is described as a positive sentiment, and we expect the security to outperform the general market. The same goes for when S-Score is low. That means sentiment on Twitter is lower than typical and we’d expect the security to underperform the market.

2024 was an exceptional year for the market, with the S&P 500 rising more than 24%, and that momentum has carried over into 2025, where the index is already up over 4% year-to-date.

The purpose of this blog is to illustrate how our data is performing while the market is off to such a strong start. One of our core strategies involves applying a simple daily threshold to sentiment scores: scores greater than 2 or less than -2. When a security's S-Score exceeds 2, it is added to our long portfolio; if it falls below -2, it is added to our short portfolio. We then construct a theoretical long/short portfolio using both. These portfolios are rebalanced daily based on the latest S-Scores for securities priced above $5. We conduct this analysis on both close-to-close (using sentiment data at 15:40 ET) and open-to-close (at 9:10 ET) intervals.

For the Close-to-Close return, our long portfolio is outperforming the S&P 500. Additionally, our short portfolio has declined by nearly 4%, which boosts our long-short portfolio to a year-to-date return of close to 6% and enhances its Sharpe and Sortino ratios compared to the S&P 500. The Open-to-Close —measuring performance during active market hours— results are similar: while the long strategy alone doesn’t quite outperform, the combined long-short portfolio performs exceptionally well.

In short, regardless of whether overnight movements are included, CA’s Twitter sentiment data has gotten off to strong start in 2025. For more information on using our social media factors for trading solutions, visit www.contextanalytics-ai.com.