What is Composite Alpha?
Regime-adjusted single-number score combining tier-weighted news + LLM brain interpretation.
Definition
Composite Alpha = w₁·Pulse + w₂·Brain, where Pulse is the tier-weighted sentiment of the recent news flow and Brain is the LLM-grade interpretation of the dominant narrative. Weights re-balance by regime: in WAR positive rows are haircut ×0.5, in PEACE both pillars contribute fully. Output is normalised to a 0-100 risk-on score.
Why it matters for trading
- No single signal dominates. Pulse misses qualitative narrative shifts; Brain over-fits to the most recent headline. The composite blunts both failure modes.
- Regime-aware weighting makes the score self-correcting: in regimes where the market punishes narrative complacency, narrative weight drops automatically.
- Composite Alpha vs the crisis floor (typical: 32) is the operational risk gate. Below 32 in CRISIS regime → unwind risk-on; above 50 → permission to take on risk.