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As Trump Has Fallen In The Polls, So Has His Stock Index

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August 18, 2016 3:44 pm
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As Trump Has Fallen In The Polls, So Has His Stock Index

Over the past four months, Donald Trump and Hillary Clinton’s poll numbers have shifted significantly. Trump reached a slight lead shortly after the Republican National Convention (RNC); however, his polls numbers have dropped sharply since his controversial Kahn family comments.

Have stocks previously labeled as likely to benefit from a Trump presidency followed his shifting poll numbers? In order to find out, Benzinga plotted the BZ Trump Stock Index against Real Clear Politics’ reported poll numbers.

The BZ Trump Stock Index

Notable stocks likely to benefit from a Trump Presidency are shown below and comprise the BZ Trump Stock Index. Each stock is weighted equally in the index.

  • Exxon Mobil Corporation (NYSE: XOM) and Chesapeake Energy Corporation (NYSE: CHK)
  • Trump has often argued the United States needs to be energy independent and wants to reduce the EPA’s regulatory power on energy companies such as Exxon and Chesapeake.

    Related Link: Themes And Stocks To Watch If Donald Trump Is Elected

  • Lockheed Martin Corporation (NYSE: LMT)
  • The Republican nominee has criticized the United States’ poor military technology when compared to rivals such as Russia. One sector he has specifically mentioned was the air force, in which Lockheed Martin specializes. The Maryland-based company focuses on high quality and top-of-the-line-military technology.

  • Microsoft Corporation (NASDAQ: MSFT) and Oracle Corporation (NYSE: ORCL)
  • Microsoft and Oracle both have about 90 percent of their entire cash holdings overseas. Trump said he would at least reduce the tax rate of cash traveling into the country as a one-time policy, providing Microsoft and Oracle with more flexibility.

  • United States Steel Corporation (NYSE: X), U.S. Concrete Inc (NASDAQ: USCR) and Caterpillar Inc. (NYSE: CAT)
  • All three companies could benefit from protectionary trade policies and all three are likely suppliers for the proposed Wall along the Mexican border. Additionally, Trump has called for the boycott of Komatsu Ltd (ADR) (OTC: KMTUY), Caterpillar’s main rival, in building the Wall of Mexico.

    Have Trump Stocks Followed His Changing Poll Numbers?

    Below is the spread between Trump and Clinton’s poll numbers with the BZ Trump Stock Index on a percentage basis.

    The two datasets have shown mixed correlation periods. The relationship between both of them grew stronger as the RNC began, with a 5 day moving average correlation efficient of 0.706 since June 18th. During the first half of May, however, Trump’s poll numbers and the BZ Trump Index seemed to have a negative relationship. Perhaps investors didn’t view pre-convention polling as an accurate indicator for the final presidential result in November, noting the total correlation efficient was a low 0.132 since early May.

    Once the Republican Party started to unify during the convention, Trump’s poll numbers began to rally alongside the Trump Stock Index. After the convention, Trump was leading Clinton by multiple percentage points, but his loathed Khan comments sent his poll numbers into a downtrend, and the BZ Trump Index followed.

    Although the two data sets had a weak relationship before the Republican Convention, they show a significant correlation of 0.706 since the RNC kickoff.

    Disclaimer: Correlation does not always equal causation. Correlational efficients were calculated based on a 5 day moving average of day-to-day percentage changes in the BZ Trump Index and a 3 poll moving average of RealClearPolitics' national poll gap between Trump and Clinton.

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