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CDW Monthly Seasonal Trading Strategy 1241%

CDW-Monthly

Investors often seek to understand the ebb and flow of the stock market. Seasonality strategies can provide a blueprint for those looking to capitalize on predictable patterns within the market’s seemingly unpredictable nature. Today, we dive deep into the monthly seasonality trading strategy applied to CDW, uncovering the potential benefits of timing the market with precision.

Company Overview

CDW is a leading multi-brand technology solutions provider to business, government, education, and healthcare customers. The company offers a broad array of hardware, software, and integrated IT solutions, including cloud and data center services, cybersecurity, and digital transformation. CDW’s tailored services and solutions are designed to streamline operations and drive value across various organizational functions.

Strategy Overview

The strategy in question involves entering long positions in CDW during February, April, May, June, July, August, October, and November, and taking a short position in January. The analysis spans from June 27, 2013, to December 30, 2022, encompassing 3473 days of market activity. During this period, the strategy maintained a market exposure of approximately 67.9%.

monthly_seasonal_analysis_chart

Key Performance Indicators

Backtesting the strategy revealed an impressive final equity of $134,105.83, peaking at $134,531.72. This translates to a return of 1241.06%, outperforming the buy and hold return of 969.12%. The annualized return stood at 31.40%, indicating a robust performance over the testing period.

strategy_equity_curve_chart

StrategyBuy and Hold
Start Date2013-06-272013-06-27
End Date2022-12-302022-12-30
Duration3473 days3473 days
Exposure Time [%]67.999.92
Equity Final [$]134105.83106205.25
Equity Peak [$]134531.72121446.76
Return [%]1241.06962.05
Return (Ann.) [%]31.428.21
Volatility (Ann.) [%]29.8137.34
Sharpe Ratio1.050.76
Sortino Ratio2.181.45
Calmar Ratio1.30.63
Max. Drawdown [%]-24.16-44.83
Avg. Drawdown [%]-3.56-4.28
Max. Drawdown Duration363 days360 days
Avg. Drawdown Duration32 days29 days
# Trades291
Win Rate [%]82.76100.0
Best Trade [%]25.16962.32
Worst Trade [%]-12.19962.32
Avg. Trade [%]9.37962.32
Max. Trade Duration155 days3471 days
Avg. Trade Duration80 days3471 days
Profit Factor10.77nan
Expectancy [%]9.79962.32
SQN3.07nan

Risk Management

Risk assessment is essential in trading. The annualized volatility of 29.81% reflects the strategy’s fluctuation rate. The Sharpe Ratio at 1.05 suggests that the return compensates for the risk taken. The maximum drawdown was -24.16%, with an average drawdown of -3.56%, and the longest drawdown period lasted 363 days.

strategy_drawdown_chart

Trade Analysis

The strategy executed 29 trades with an 82.76% win rate. The best trade yielded a 25.16% return, while the worst saw a decline of -12.19%. The average trade return was 9.37%, with the longest trade duration being 155 days and the average at 80 days. The Profit Factor stood at a remarkable 10.77, with an expectancy of 9.79%.

trades_distribution_chart

Conclusion

Overall, the backtesting results demonstrate that a well-crafted monthly seasonality strategy can yield substantial returns while mitigating risk. Investors should consider such strategies as part of a diversified portfolio to enhance their market positioning and potential profitability.

strategy_monthly_return_chart