Real Estate Sector Trading Strategy: Rules, Backtest, and Application Examples

In this post, we describe the real estate sector and we end the article by backtesting a real estate trading strategy. Actually, we do several backtests and even offer a real estate seasonality. The real estate sector behaves slightly differently than the overall stock market, and thus might offer some diversification benefits for short-term traders.

Let’s go on to backtest our first real estate trading strategy (we use VNQ):

We start with a seasonal strategy. As with most of the other sectors in the stock market, real estate also has months that are better than others.

It turns out that the real estate sector has had a strong tailwind from early March until late July. Let’s backtest VNQ and buy the open in March and sell the open in August.

We get the following equity curve (Shown in the image)

You can find more info about this trading strategy here:
https://www.quantifiedstrategies.com/real-estate-trading-strategy/