Tested what happens if you invest in any SP500 stock that goes up 20% in a day. Here are the results.

There are so many stocks I see skyrocketing in a single day lately (INTC, AKAM, etc.), I got curious if you should get in on the action or wait for a correction, so took a look at what historically happened in the past 5 years. The results:

Total trades/20% stock days: **129**

https://preview.redd.it/mutac0i73s0h1.png?width=782&format=png&auto=webp&s=15cc578a11f27c4b41cb9d0401b4fa32f9d05e9f

So basically if you hold for a week or less it's a coin flip and you're better off not putting money in it. But if you hold it for a month (20 trading days), it actually seems like a decent return, and a good p-value so it's a valuable insight.

Carvana also showed up the most (19 times) so I checked what would happen if I excluded it and the results stayed consistent, so no single stock is over-influencing it.

Then I ran the month-exit strategy as a simple backtest. The setup: 10K starting capital, all in SPY, then when a stock triggers the 20% criteria, take 20% of SPY balance (I know it's a crazy amount, just did it out of curiosity), hold for 20 days, then sell and put back in SPY. Here's how it compared to just keeping it in the SPY for 5 years:

https://preview.redd.it/vmmnsfwf3s0h1.png?width=695&format=png&auto=webp&s=e9f0a86d0ac506e85e7af817995114d6940a2968

So the strategy worked super well, but the drawdown was pretty rough, so would definitely reduce the 20% stake to 10% or even 5% if I were to do this with real money.

Anyway was just having fun testing this scenario and thought I'd share. Cheers!

PS: it's my first time posting an analysis post, let me know if there's any other data/metrics/etc. that would be helpful or if I should tweak my approach, I mainly just did this analysis for fun.