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S&P Phenomenon

S&P Phenomenon

What is 'S&P Phenomenon'

The tendency for a stock that has been recently added to the S&P composite index to experience a temporary price increase. The S&P index to which this phenomenon refers to is the S&P 500 – the Standard & Poor's index that is based on 500 leading companies in predominant industries of the U.S. economy. When a stock is newly added to the S&P composite index, it is often accompanied by a significant number of buy orders as many S&P-related index funds add the particular instrument to their portfolios. This increase in buy orders temporarily drives up the price, creating the S&P phenomenon.

Explaining 'S&P Phenomenon'

The S&P 500 is often considered the best single gauge of the large cap U.S. equities market. The index, which was first published in 1957, is followed by many traders and investors as a means of keeping a pulse on the overall market. The index is maintained by the S&P Index Committee, which includes Standard & Poor's economists and index analysts. This team meets regularly to monitor the index and to consider and implement changes to the index.

Criteria for index additions include: being a U.S. company, market capitalization in excess of $4 billion, a public float of at least 50%, financial viability, adequate liquidity and reasonable price, sector representation and company type.

Criteria for index removals include: violation of one or more index inclusion criteria, mergers, acquisitions or restructuring that changes inclusion status.


Further Reading


Using neural networks for forecasting volatility of S&P 500 Index futures prices
www.sciencedirect.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

Style momentum within the S&P-500 indexStyle momentum within the S&P-500 index
www.sciencedirect.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

Does delisting from the S&P 500 affect stock price?Does delisting from the S&P 500 affect stock price?
www.tandfonline.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

Tracking S&P 500 index fundsTracking S&P 500 index funds
jpm.pm-research.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

Forecasting S&P-100 stock index volatility: The role of volatility asymmetry and distributional assumption in GARCH modelsForecasting S&P-100 stock index volatility: The role of volatility asymmetry and distributional assumption in GARCH models
www.sciencedirect.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

The geography of S&P 500 stock returnsThe geography of S&P 500 stock returns
www.tandfonline.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

The fear and exuberance from implied volatility of S&P 100 index optionsThe fear and exuberance from implied volatility of S&P 100 index options
www.jstor.org [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …

Predicting the daily covariance matrix for s&p 100 stocks using intraday data—but which frequency to use?Predicting the daily covariance matrix for s&p 100 stocks using intraday data—but which frequency to use?
www.tandfonline.com [PDF]
… The use of neural networks in economics and finance is a more recent phenomenon … the technology is yet to be evaluated in some promising areas of economics, finance, and business … It makes a rather straightforward exposition of forecasting volatility of S&P 500 Index futures …



Q&A About S&P Phenomenon


Why do companies get removed from this list?

Companies can be removed if they violate one or more of these criteria, merge with another company or undergo restructuring that changes their inclusion status in the list.

How often do changes occur in this index?

Changes occur regularly as companies are added or removed from it.

Why do companies get added to this index?

Companies get added to this index because they meet certain criteria including being a U.S company, having a market capitalization of over $4 billion, being publicly traded and having adequate liquidity and reasonable price, sector representation and company type.

Who maintains the Standard & Poor's Composite Index?

The Standard & Poor's Index Committee maintains the index.

What does the S&P 5 index measure?

The S&P 5 measures large cap U.S. equities market.

What is the S&P Phenomenon?

The S&P Phenomenon is a temporary price increase experienced by stocks that are recently added to the S&P composite index.