SWFL Stock Index
Last Updated: November 22nd, 2024
Summary
Movements in the stock market are considered to be a leading indicator of the economy. This is because stock prices reflect expectations on future earnings, which are directly linked to future economic activity. The SWFL Index tracks the stocks of publicly traded companies that are headquartered in Southwest Florida and is to be used in conjunction with the other dashboard data to help us form a clearer picture of the overall Southwest Florida economy.
The SWFL stock market index is our new addition to the Regional Economic Indicators Dashboard. It is different and unique from all the other indicators since the index pricing data is real-time, and potentially forward-looking, as stock prices tend to discount the future.
On December 14th, 2023 the SWFL Stock Market Index was rebalanced. We removed Arboreta Healthcare Inc. (ARBH) as its stock price fell below a cent. Moreover, PGT Innovations Inc (PGTI) was added to the index, this is a company in the industrials sector headquartered in North Venice, FL, and currently represents 4.11 percent of the SWFL Index. Instead of comparing the performance to the S&P 500 which is a Market Capitalization weighted index, we decided it would be ideal to compare the SWFL Stock Market Index performance to the Dow Jones Industrial Average which is also a price weighted index, and to the S&P 500 equally weighted index.
From 2020 to 2022, the S&P 500 Equally Weighted had an annual rate of return of 12 percent, while the Dow Jones Industrial Average had an annual rate of return of 8 percent. Over the same period, the SWFL Index yielded 13 percent annually, outperforming the S&P 500 equally weighted by 1 percent and the Dow Jones by 5 percent.
Between January and December 2023, the SWFL index has generated positive returns (up 18 percent YTD) outperforming the S&P 500 equally weighted which is up by 9 percent YTD, and the Dow Jones which is up 12 percent YTD.
Overall, the SWFL index has been trending upward this year, a positive indicator of expected profitability and economic activity for the region.
About the Data
The SWFL Index is a price weighted index that was developed by creating a portfolio in Bloomberg with companies domiciled in cities located in Southwest Florida. The index includes companies with actively traded stocks and market capitalization of more than $10 million. The index composition is more heavily weighted in the Technology sector (64 percent), Industrials sector (25 percent), and Financial Services sector (5 percent).
The index was developed using R to scrape (import) the daily prices of the of the 15 selected stocks from Yahoo! Finance since January 1st, 2020.[Because January 1st, 2020 is not a business day, stock prices for that day were unavailable on the Yahoo Finance website, so the baseline date for the index was set to January 2nd, 2020. The portfolio is price-weighted to minimize the impact of ‘penny stocks’. For this same reason, the Bloomberg Florida Index is also price weighted. The index is calculated as follows:
It is important to mention that the PWI base-date is January 2nd of 2020, which is set to be equal to 100. In addition, Arboleta Healthcare Inc, Conyers Park III Acquisition Corp, and Hertz Global Holdings Inc, were not public companies in 2020, so the index divisor was adjusted to account for the addition of these stocks throughout the following years. See our Issue Brief for more information on the calculation of the SWFL Stock Index.
