How Many Stocks Actually Follow the Market?
Update: 2025-09-29
Description
Market analysis reveals that approximately 70% of stocks in both S&P 500 and NASDAQ follow the overall market direction on any given day. During significant market movements exceeding 2%, over 80% of components move in tandem with the index.
For moves greater than 3% in either direction, correlation increases dramatically with over 92% of NASDAQ components following the index. This research demonstrates that downward market movements show stronger correlation than upward trends, suggesting "fear is greater than greed."
The data confirms that hedging strategies are more effective using index ETFs rather than individual stocks, particularly when anticipating significant market moves. Only 8-12% of components typically move counter to the overall market trend during major shifts.
For moves greater than 3% in either direction, correlation increases dramatically with over 92% of NASDAQ components following the index. This research demonstrates that downward market movements show stronger correlation than upward trends, suggesting "fear is greater than greed."
The data confirms that hedging strategies are more effective using index ETFs rather than individual stocks, particularly when anticipating significant market moves. Only 8-12% of components typically move counter to the overall market trend during major shifts.
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