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

Discussion in 'Trading' started by Love2Trade$, Apr 30, 2019.

  1. 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?
     
  2. jharmon

    jharmon

    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.
     
  3. 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?
     
  4. ph1l

    ph1l

    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.
     
  5. I could have searched the internet for weeks (and usually do lol) and still not have found this link. You're a beast thanks @ph1l !!!
     
  6. jharmon

    jharmon

    Different start date, different base (starting point), different weighting methodology.
     
  7. Oh I see, ok thanks for putting it in context for me @jharmon !