S&P500 vs. S&P500F

allalongthewatchtowe · August 10, 2016, 4:40pm

I have a question about S&P500. I have been watching S&P500 and S&P500Future on marketwatch.com. I have two questions:

Question 1: Can someone please explain the relationship between the two indexes? I googled this a bit and was unsuccessful in interpreting what fluctuations mean in each of these markets.

Question 2: From thislink, I understood that it indicates the overall outlook of S&P500 in the future. However, I am not quite sure how far down the line (i.e. 2 months? 2 years? 10 years? etc.) is S&P500F indicative of S&P500. I’d appreciate any thoughts.

Question 3: I also googled correlation between S&P500 and S&P500F, but I couldn’t find any result. I found correlation between S&P500 and economy but not with S&P500F. I figured maybe my question doesn’t make any sense.

Any thoughts?

allalongthewatchtowe · August 11, 2016, 4:12pm

Anyone who could share thoughts?

Professor_of_Hamburg · August 13, 2016, 2:45am

1.) S&P500 is an index - it’s not a security and cannot be traded. The Future is a security that can be traded, and closely tracks the price of the index. There is a slight difference in the value of the two for reasons that aren’t really important here. Thats the relationship.

2.) Its not really indicative of outlook like you can use a current reading for predictive value. What they mean is that is the future is higher than the prior day, then it suggests a positive market outlook for that day. As in, when the market opens, the market will likely be at a similar level (the market meaning the 500 component stocks in aggregate).

3.) the correlation will be ~1

allalongthewatchtowe · August 15, 2016, 4:23pm

Question: Why do you say that S&P500 is not an index? A simple google search shows that S&P500 is an index. What am I missing here? https://www.google.com/search?q=s%26P500+index&ie=utf-8&oe=utf-8

For others who are reading, I found a great resouce on this topic-i.e. S&P500 vs. S&P500F