You have probably heard about the Halloween effect or the autumn rally. The former term refers to the fact that stocks on average tend to perform significantly worse in the summer months than in the winter months, the latter term describes the typically very strong advance in stocks before the turn of the year.

Both phenomena apply to the broad stock market, i.e. the benchmark indexes. 

A number of individual stocks have their own “seasons”

However, certain individual stocks can diverge from the indexes and exhibit seasonal patterns of their own. I will illustrate this with an example.

Hasbro: seasonal strength from February to April

I have picked Hasbro (HAS), a manufacturer of toys headquartered in Pawtucket, Rhode Island in the US. You are very likely familiar with one of the company’s products: Monopoly (a board game originally made by Parker Bros.).

Take a look at the typical pattern the stock exhibits in the course of a calendar year, which can be discerned at a glance on a seasonal chart. The chart below is calculated by averaging the performance of the stock over the past 20 years. The horizontal axis depicts the time of the year, the vertical axis the level of the seasonal pattern (indexed to 100)

Hasbro, seasonal pattern over the past 20 years

Hasbro typically advances strongly from February to April. Source: Seasonax 

As the chart shows, Hasbro typically rallies very strongly in the three months to the end of April, but on the other hand the stock’s seasonal pattern indicates that it tends to lose ground over the rest of the year.

The time period associated with the strongest seasonal performance is highlighted on the chart. It begins on January 31 and ends on May 2.

Hasbro’s very positive performance at this time of the year diverges from that of benchmark indexes like the S&P 500. In seasonal terms, the latter typically barely rises in February, while it usually displays significant strength at the end of the year.