Returns Fall and Volatility Rises Near U.S. Presidential Elections

• Monthly stock market returns fall an average of 0.72% to 0.32%.

• Equity REIT monthly return volatility rises by approximately 77%.

• Monthly equity returns fall from an average of 1.06% to 0.55%.

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OVERVIEW

The 2020 calendar year has already seen more than its fair share of volatility provoking events. Rising tensions in both trade and foreign policy relations provided markets with heightened anxiety even before the onset of the COVID-19 pandemic. Looking ahead to the upcoming U.S. presidential election, divisiveness and potential volatility seem likely to ensnare the country during the next few months.

This article attempts to quantify the observable market effects of the U.S. presidential elections throughout recent history. With specific attention to measures of volatility and returns across real estate and other public equities, this limited study finds evidence of lower average returns and higher levels of volatility in the immediate few weeks before and after general elections.

For the full analysis, visit Arbor Chatter at the Arbor Realty Trust website.