Removal from or addition to SP500

The addition or removal of a stocks from the SP500, and perhaps other indicators based on high standards for inclusion, can have strong effects of stock price. The idea here is to short stocks that are removed and buy stocks that are added.

In 2021, the S&P announced additions and removals in December 3 and changes became effective on the closing of December 17th.

Figure 16.1: SP500 removed or added

The figure below show the price for one of the stocks added. As noted changes were obvious after the 17th.

Figure 16.2: SP500 added

The figure below show the price for one of the stocks removed As noted changes were obvious on the 17th. Although price eventually recovered to that position several days later.

Figure 16.3: SP500 removed

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