Market vs Polling Arbitrage

Overview

This pillar identifies discrepancies between political polling averages and prediction market prices. It helps you spot undervalued or overvalued candidates by comparing what the public says to where the money is going.

What It Does

It aggregates data from leading pollsters and prediction markets, converting both into standardized probabilities. The pillar then calculates the spread, or delta, between these two data points. It highlights significant gaps, suggesting potential mispricing in the market for political outcomes.

Why It Matters

Prediction markets can sometimes overreact to news, while polls are slower to update. This pillar provides a crucial reality check, helping you determine if market odds are grounded in statistical data or driven by short-term sentiment.

How It Works

First, we calculate a weighted average from top poll aggregators like FiveThirtyEight and RealClearPolitics. Next, we convert the current market contract price into an implied probability. Finally, the pillar subtracts the polling average from the market probability to reveal a positive or negative arbitrage gap.

Methodology

Calculates a 7-day rolling weighted average of polls from sources like RCP and 538. Market implied probability is calculated as Price / 100. The core metric is the Delta, where Delta = (Market Implied Probability - Polling Average). Signals are flagged when the absolute Delta exceeds 5% and trading volume is above the 24-hour moving average.

Edge & Advantage

This pillar provides a quantitative edge by systematically spotting market inefficiencies that emotional or news-driven traders often miss.

Key Indicators

• Probability Delta

  high

  The percentage point difference between market implied probability and the polling average.

• Polling Momentum

  medium

  The 7-day trend of a candidate's polling average.

• Market Volume Spike

  medium

  A significant increase in trading volume, indicating new information or conviction.

Data Sources

• FiveThirtyEight

  Provides statistically adjusted polling aggregates for US elections.

• RealClearPolitics

  Averages recent national and state-level political polls.

• Prediction Market APIs

  Real-time odds and volume data from various prediction markets.

Example Questions This Pillar Answers

• → Will Candidate X win the Republican presidential primary?
• → Who will win the 2024 US Presidential Election?
• → Will the incumbent party retain control of the Senate?

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