Best sector indices: U.S. vs. S&P vs. Nasdaq?

Love2Trade$

Love2Trade$

Hi ET!

I trade U.S. only stocks mostly in the following sectors: Biopharma, REITs, Tech, and Oil & Gas. I trade Nasdaq listed stocks (70%), NYSE (20%), AMEX (10%). I do not trade indices (only individual stocks) and use the index / sector that stock is in to make decisions regarding the underlying stock I'm trading (time frame - intraday up to 1 week). I use Interactive Brokers, they charge for some indexes but not others, and I am ok w/ paying if necessary. Thanks for your opinion!
  1. Which of these sector indices are the most accurate representation of the sectors above (see attached images): U.S. Indexes, S&P Indexes, or Nasdaq? E.g. - If I want a basic REIT index representative of all U.S. listed REIT stocks, then which REIT index across those 3 choices would I use?

  2. What is the trade off between precision and broad representation between different indices? E.g. - If someone is trading a Nasdaq REIT stock would they use a Nasdaq REIT index to get more precision over an S&P 500 REIT index even though the S&P index would be a broader representation of REITs in general?
 

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Who cares where it's listed? Why would you use an exchange-specific index?

Most indexes are market cap weighted anyway, so a broader index is 99.9% correlated to a narrower one anyway.

Why not download the data and check the correlation? You'll find they they are all mostly interchangeable.
 
jharmon said:
Who cares where it's listed? Why would you use an exchange-specific index?

Most indexes are market cap weighted anyway, so a broader index is 99.9% correlated to a narrower one anyway.

Why not download the data and check the correlation? You'll find they they are all mostly interchangeable.
More...

Thanks for the detailed response JHarmon! I appreciate the knowledge. Sorry for any newbie q's, I really did research all this b/f posting. Couple thoughts whenever you have time. Thank you!
  1. How come the same index across different vendors has drastically different total values?
    - DJ US Biotech Index (DJUSBT on IB TWS): 1,910.30
    - S&P Biotech Select Industry Index (SPSIBI): 6,493.41
  2. Where do I find out the underlying holdings from which a given index is based off of? - E.g. - I know the DJIA is based off of 30 of the largest U.S. publicly traded companies, but where can I see exactly which companies and what portion of the index each company comprises?
 
Love2Trade$ said:
Thanks for the detailed response JHarmon! I appreciate the knowledge. Sorry for any newbie q's, I really did research all this b/f posting. Couple thoughts whenever you have time. Thank you!
  1. How come the same index across different vendors has drastically different total values?
    - DJ US Biotech Index (DJUSBT on IB TWS): 1,910.30
    - S&P Biotech Select Industry Index (SPSIBI): 6,493.41
  2. Where do I find out the underlying holdings from which a given index is based off of? - E.g. - I know the DJIA is based off of 30 of the largest U.S. publicly traded companies, but where can I see exactly which companies and what portion of the index each company comprises?
More...

Where do I find out the underlying holdings from which a given index is based off of?

For an approximate weighting of index components, you can look at
https://etfdb.com/indexes/equity/
for links to indexes which have links to ETFs tracking the index which have links for the ETF's holdings.
 
Love2Trade$ said:
How come the same index across different vendors has drastically different total values?
- DJ US Biotech Index (DJUSBT on IB TWS): 1,910.30
- S&P Biotech Select Industry Index (SPSIBI): 6,493.41
More...

Different start date, different base (starting point), different weighting methodology.
 
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