Composite Conviction Index

The Composite Conviction Index synthesizes disparate data streams including Form 4 filing patterns, Rule 10b5-1 trading plan adoption timing, insider transaction clustering, sigma scores, information coefficients, and signal decay measurements. Each component undergoes point-in-time normalization and is weighted according to its empirically validated information ratio and historical predictive lift within specific regimes. The index is designed to isolate genuine conviction signals from noise by cross-validating insider behavior against quantitative market-regime indicators and sector-momentum factors, reducing look-ahead bias through rolling-window recalibration.

In practice, the Composite Conviction Index operates as a real-time surveillance and ranking tool within insider-trading surveillance systems, flagging concentration of buying or selling activity when conviction scores exceed regime-adjusted thresholds. The index accounts for material nonpublic information leakage risk through tipping-facilitation-detection modules and incorporates shadow-trading detection to identify potential mosaic-theory violations. A high conviction index reading signals either elevated market-abuse risk or legitimate alpha-generating insider alignment, requiring differential investigation protocols based on transaction-cost-drag, track-record-score correlation, and closely-associated-person relationships.