political event portfolios
We use our election portfolios to analyze various Trump and Biden Stocks, as well as Industries and Investment Funds with regard to their properties.
Based on the sensitivity of stocks to changes in winning probabilities observed before the election, we show how the stock market’s assessment of the unobserved postelection winning probabilities can be backed out from stock prices.
We use data from betting markets to analyze the sensitivity of stock returns to potential outcomes of political events such as elections. By classifying stocks into expected conditional winners and losers prior to such an event, we form portfolios that generate large positive returns after the event date, conditional on correctly anticipating the outcome. We illustrate this using data from the 2016 US presidential election and the 2016 Brexit referendum.
Research data, plots and information regarding the 2020 US presidential election.