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The St. Patrick’s Day Effect on the Stock Market


It’s a day when everyone wears a bit of green; a day when a Guinness or two is a necessity; it’s the day when everyone becomes a little Irish. This of course is St. Patrick’s Day. Falling on the 17th of March, St. Paddy’s day has been known to put people in an upbeat mood, so does this translate into green returns?

How has the market reacted in the past to this event?

The S&P 500 has reacted favorably to this day, producing an average gain of 0.57% and 78.5% of sessions advancing over the past 20 years. Looking at the week following, average gains of 0.91% and 52% of sessions gaining have become the norm, with the best returns of 1.94% coming by March 19th, on average.

The day prior brought average gains of 0.39% and 57% of sessions gaining.

Looking to celebrate the day with a Guinness?

Analyzing the gains seen on St. Patrick’s Day of Diageo PLC (NYSE:DEO), the parent company of Guinness, and the returns don’t leave much to celebrate over. Returns averaged -0.07% with 43% of sessions gaining over the past 10 years. The week after wasn’t much better with losses growing to 0.30% and 39% of sessions producing positive returns. Best gains during this timeframe were seen on the 18th with an average return of 1.15%.

So where is the optimism you ask? Well the bulk of the returns were seen not in the days directly after the big day, but in the days leading up to the event. March 16th has shown gains on average for this stock of 2.05% and 71% of sessions gaining. Open it up to the week prior and gains averaged 1.88% and 70% of periods with positive returns.

It must be noted that although gains did not present themselves directly following the day, gains one month after the March 17th date averaged 4.38% and 80% of periods gaining over the past 10 years.

Need to go to the bank before that pint?

Albeit rather a long shot to expect a major bank based in Ireland to be impacted by a day such as this, the returns for Allied Irish Bank (NYSE:AIB) are rather interesting. The week leading up to the day averaged gains of 3.37% and 48% of sessions gaining. March 16th averaged a gain of 1.06% alone.

The gains on bulk came in the period after the event. The returns on the day came to 0.62%, 4.26% over the week and 9.65% over the month. This is based on a 15 year timeframe of which 12 of the periods over the week and month saw gains. If you played it right you would have averaged a maximum return of over 17% on the month and 5.7% on the week.

So you like Ireland so much that you’ve decided to take a trip there?

Ryanair (NASDAQ:RYAAY) has its head office in Dublin, Ireland and has become the largest airline in Europe. Take a look at the returns on the stock in the period leading up to St. Patrick’s Day: loss of 1.76% on average the day prior; loss of 3.06% the week prior, loss of 4.55% the month prior. Losses over this period leading up to the day were seen in 62% to 72% of sessions.

But of course that is the period prior to the day. It takes a taste of green to pique your interest in the Irish culture. St. Patrick’s Day showed gains in the price of the stock to the tune of 1.76% and 86% of sessions gaining over the last 10 years. Opening it up to the week and month following and gains of 3.41% and 3.98%, respectively, make investors feel like they had the luck of a leprechaun.

The Bottom Line

There is much subjectivity over the results shown and it’s hard to peg the responsibility of the returns solely on St. Patrick. Let’s not overlook the fact that triple witching day occurs almost immediately following this event, on the third Friday of this month (March 19th). With stock and index options as well as index futures expiring on this day, investors seek to offset their positions before the closing bell, causing erratic activity in the period leading up to this deadline.

But regardless of these extraneous events, the results are undeniable with the Irish airline and bank gaining heavily in the period following this joyful day. The beer company still showed decent results both before and after the event, just not directly following the day, with gains acting as bookends to the losses around the day itself.

So with these plays, who knows…maybe you’ll find a pot of gold at the end of the rainbow.

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