XHB Lead the Broad Stock Market?

Do stocks of homebuilders, whose sales are particularly sensitive to interest rate changes, reliably lead the overall stock market. To check, we look at lead-lag relationships between monthly returns for SPDR S&P Homebuilders ETF (XHB) and returns for SPDR S&P 500 ETF Trust (SPY). Using monthly dividend-adjusted returns for XHB and SPY during February 2006 (inception of XHB) through February 2022, we find that: (more…)