Here's How A Halloween Portfolio Performs Against The Market

Halloween is big business for companies like Party City Holdco Inc PRTY, Walmart Inc WMT and Target Corporation TGT, all of which sell costumes, decorations and candy for the holiday. For traders looking to take advantage of these trends, here’s a closer look at whether a seasonal Halloween trade exists.

Halloween Spending

The average American will spend $185.50 on Halloween this year, about $15 more than last year, according to Lendedu. Of that $185, about $76 (41 percent) will be spent on candy, $67 (36 percent) will be spent on costumes and $43 (23 percent) will be spent on decorations.

In looking for a potential Halloween trade, Benzinga compared the average price performance of Party City, Walmart, Target, Dollar General Corp DG and Five Below Inc FIVE to the performance of the S&P 500 in the period just prior to Halloween and the months following the holiday over the last four years.

The Numbers

In the week prior to Halloween, there seems to be no evidence that the five stocks outperform as a group.

Five Below has been the top performer of the group in the week prior to Halloween, averaging a 0.52-percent gain. That return is roughly in-line with the 0.5-percent average gain of the S&P 500 over the same period. Walmart (-0.3 percent), Target (+0.1 percent), Dollar General (+0.2 percent) and Party City (-4.8 percent) have all underperformed.

The week following Halloween has been equally uneventful for these five stocks.

Walmart is the lone outperformer in the post-Halloween week, gaining an average of 1.8 percent compared to the S&P 500’s average 0.5-percent gain. Once again, the other four members lagged, with Party City performing the worst, losing an average of 4.6 percent. Overall, the five stocks mentioned generated an average post-Halloween weekly return of negative 0.2 percent.

Looking ahead a full quarter, the basket of Halloween stocks has historically performed relatively well, averaging a 5.6-percent gain compared to just a 2.2-percent gain for the S&P 500. Q4 is packed with holidays, including Thanksgiving, Christmas, Hanukkah and New Year's Eve, so it’s hard to imagine Halloween is the primary driver for stocks like Walmart and Target from November through January.

Bottom Line

In terms of seasonal Halloween trading trends, recent data suggest there’s not much action in Halloween stocks in the two weeks surrounding the holiday. If anything, Party City could be a potential short idea. But with only three years of data — Party City went public in April 2015 — even that stock’s Halloween weakness could easily be attributed to simply a small sample size.

Related Links:

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Pre-Holiday Effect One Of Many Tradable Seasonal Market Trends