An Analysis of the Forecasting Potential of Virtual Assets on Real World Assets : Can Runescape 3 bonds be used to forecast the S&P500?

Sammanfattning

The prediction of broad market indices, such as the S&P 500, remainsa cornerstone of financial economics. Concurrently, virtual economieswithin massively multiplayer online games (MMOs) have grown sophisticated enough to reflect real-world consumer demand and discretionary spending. This thesis investigates whether the price dynamicsof RuneScape 3 (RS3) Bonds, acting as a digital proxy for consumerleisure spending, can provide predictive insights into the macroeconomic movements of the S&P 500 index.By applying the Toda-Yamamoto procedure for Granger causalityto daily time-series data from January 2020 to December 2025, weanalyze the lead-lag relationship between these conventional and nonconventional economic indicators. The results indicate an existence ofa statistically significant bidirectional effect between RS3 Bond pricesand S&P500 prices.Our results are however tentative and explorative as our methoddoes not correct for multiple testing, which means that the observedsignificant relationship may be a type I error. Still, our results are intriguing and the existence of a bidirectional predictive relationship is inline with the notion that consumer sentiment affects both of the studiedmarkets.