ES performance vs NQ and YM today
- Thread starter hajimow
- Start date
These correlations come and go.
The obvious answer should be that some components in SPX is putting a weight on that index.
Doesn't look too out of whack today to me, though.
But I'm no expert.
The obvious answer should be that some components in SPX is putting a weight on that index.
Doesn't look too out of whack today to me, though.
But I'm no expert.
The differential gain/loss is heavily traded. Since the CME gives a 70% margin discount on the correlation, this trade is highly leveraged.
Remember, if there is a strong correlation among leverageable assets, in this case NDX and SPX, then you can either trade the outperformance of the tech index with a long/short position in NQ vs ES, or you can overweight the SPX and hedge out some vol by shorting the correlated NDX futures.
A high degree of correlation can be used to trade an outperforming asset, and if inversely weighted, the more volatile asset can be used to hedge exposure to the underperformer.
Remember, if there is a strong correlation among leverageable assets, in this case NDX and SPX, then you can either trade the outperformance of the tech index with a long/short position in NQ vs ES, or you can overweight the SPX and hedge out some vol by shorting the correlated NDX futures.
A high degree of correlation can be used to trade an outperforming asset, and if inversely weighted, the more volatile asset can be used to hedge exposure to the underperformer.
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ONE public profit YM [intraday] trader put on quite a few public profit YM trades, elitrader.com.
He did diverge from Merriam Webster's idea+ had a great quote.
One trader asked ''dont you ever look @ oil?
He said ''No , YM is correlated to itself''
It was my long term observation which was true 95% of the time. My reasoning was that DOW is less volatile than Nasdaq and S&P is something between. So if DOW is up 0.5% and Nasdaq is up 1.5%, usually S&P is up 1% (95% of the time this theory is true).
huh? !!