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COVID-19 Stock Exploration and Time Series Analysis

Faisal Refai, Misran Dolan, Hisham Iqbal

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Background

  • To analyze past stock market trends in crisis events or events similar to COVID-19 in an attempt to make predictions about COVID-19’s future impact on the US Stock Market.
  • Events we chose to analyze
    • 9/11 Attack
    • SARS outbreak
    • OPEC Embargo
    • H1N1 Swine Flu
  • While many of these events have differing impacts and global effect, we attempted to find the most similar impacts to the current situation in order to best draw conclusions
  • Found data sources for stock market data using Kaggle and Yahoo Finance API then cleaned data for analysis

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Closing Rate Analysis

  • Using Yahoo finance API found rate of change of closing values of S&P 500
  • Found this data for most critical 60 days of the crisis
  • Overlapped data with Coronavirus crash dates

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Relating Analysis to Real World

  • 9/11 had one of their largest changes in closing value rates during the first week of October, 2001. This can be partly explained to the US led invasion of Afghanistan, marking the start of the “War on Terror”
  • Ebola had its largest spike around early November, the same time that the White House requested $6 billion in funding from Congress
  • H1N1 had several large drops in the closing value rates in June
    • June 11: WHO announces H1N1 as a pandemic
    • June 19: All 50 states reported to have H1N1 cases
    • June 25: 1 million cases of H1N1 in the U.S.
  • The largest shocks for Coronavirus were around mid-March
    • March 11: WHO declares COVID-19 a pandemic
    • March 18: Trump signs a relief package
    • March 27: $2 Trillion stimulus package signed

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Conclusions from Rate of Change

  • There can be similar trends in the market following varying crisis/outbreak which affect multiple industries
  • Coronavirus seems to be have a much stronger volatile effect on the stock market compared to any other crisis.
  • While aspects may be predictable with similar trends, as seen with 9/11 and H1N1, it can be connected back to implications about Coronavirus

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Predictive Analysis of Gainers and Losers in Current Stock Market

  • Using the Yahoo Finance API alongside Facebook Prophet’s API we were able to conduct a time series analysis
  • One current gainer is the pharmaceutical industry while one loser is the crude oil and industry
  • The graphs show the predicted closing value of each respective index of the industries one year out

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Conclusions from predictive analysis

  • Analyzing recent and current data is very volatile given the changing nature of our economics in this pandemic
  • Because we are in the middle of the pandemic there isn’t enough data to accurately predict what will exactly happen
  • However, it could be particularly useful to compare our predictions to how the stock market will perform in the future as a benchmark for these industries

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Key Takeaways:

  • COVID-19 follows other crises in terms of response from the government and trends in the stock market
  • This current pandemic is causing the stock market to be much more volatile than in the past due to increased spread and severity
  • Analysis right now is speculative but should be used as a benchmark for the future
  • Questions?