Even Vs. Odd Days Trading Strategy (S&P 500)

Last Updated on September 8, 2021 by Oddmund Groette

One of the more peculiar effects on the S&P 500 is the huge difference in performance between odd and even days.

This article shows a trading strategy that is only invested at odd calendar days and one other strategy that is only invested at even calendar days. It’s not a tradeable trading strategy but nevertheless, even days show a strong outperformance compared to the odd calendar days.

Odd vs. even days

Presumably, the Greeks placed numbers that couldn’t be arranged in two rows as odd numbers. Thus, odd numbers can’t be put into pairs. If you have five candies and want to split them into two equal parts, you obviously can’t do it unless you split one of them in two.

Opposite, even numbers are easily divided into two equal parts. If you have 16 candies, you split them into two parts of eight each.

In this article, the odd days are the following calendar days:

1, 3, 5, 7, 9, 11, 13, 15, 17, 19, 21, 23, 25, 27, 29, 31

The even days are the following calendar days:

2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 22, 24, 26, 28, 30

The performance of odd vs. even days in the S&P 500

We test the following trading strategy:

At the close of even days, we buy the S&P 500 and hold it until the close of the following odd day. This is the performance of odd days.

At the close of odd days, we buy the S&P 500 and hold it until the close of the following even day. This is the performance of even days.

If we invest 100 000 into each strategy in 1993 and let it compound until September 2021 we get these two equity curves:

The red line (strategy 1) is the strategy of owning the S&P only during even days, and the blue line is owning the S&P 500 only during odd days.

As you can see, the performance is substantially different. However, most of the outperformance of the even days happened from the GFC in 2008/09.

 

Disclaimer: We are not financial advisors. Please do your own due diligence and investment research or consult a financial professional. All articles are our opinions – they are not suggestions to buy or sell any securities.