XLF is an exchange traded fund whose portfolio is comprised of US financial services stocks. This investment seeks to provide the same performance as stocks in the Financial Select Sector Index. This index includes securities of companies from the following industries: diversified financial services; insurance; banks; capital markets; mortgage real estate investment trusts ("REITs"); consumer finance, thrifts and mortgage finance.
can be defined as the predictable changes that occur over a one-year period in an economy, market or business, based on the seasons of the calendar year.
Academic research supports the notion that seasonal pricing patterns occur with regularity in futures contracts of commodities with fixed maturities, most notably in the natural gas and crude oil markets.
For example, Ewald, Haugom, Stordal, Lien and Wu find evidence for seasonality in futures products that appears distinct from the seasonal patterns in spot price for the respective commodities.
Traders often attempt to take advantage of seasonal patterns through spread trades that hold long and short positions in assets of differing maturities simultaneously or across related assets in financial products such as equity sector ETFs
, index futures
Investors in individual equities may take seasonality into account when when analyzing the impact that seasonal changes may have on the fortunes of particular companies. For example, for many businesses, sales can vary depending on the season. In such cases, the share prices of business that experience higher profits during specific seasons may simultaneously register significant gains while later giving them back during off-peak periods.