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How Indices Move Together

Stock indices move together because the same companies sit in several of them and the same money moves through all of them in the same hours, and they move apart because each has its own members and weights. This paper shows the shared members, three real days on which the Dow and the Nasdaq 100 moved the same way and one on which they did not, the two charts across the same sixty days, and the Daily change column that shows every index's day on a platform. After reading it you can explain why two index rows usually share a sign but never a size, and read that off the Market Watch.

Difficulty
Advanced
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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Indices together, in five lines

Indices move together because the same companies sit in several of them and the same money moves through all of them in the same hours. They move apart because each has its own members and its own weights, so a bad day for one sector shows in one number more than another. Three real days from this library's bars, open to close: on Monday 24 August 2026 the Dow rose 0.33 percent while the Nasdaq 100 fell 0.88. On Tuesday both rose, 0.20 and 0.54. On Wednesday both rose again, 0.16 and 0.38. The same way most days, never the same size, and sometimes opposite ways.

Two baskets, shared members

Picture two baskets from one shop with some of the same things in both. The Dow holds thirty companies and the Nasdaq 100 a hundred, and a handful of the largest, Apple and Microsoft among them, sit in both; a move in one of those moves both numbers at once. The members each basket has alone are the difference: the Dow's banks and industrials, the Nasdaq's chip and software companies. The shared members are the link, and the weights decide how much of each basket the link is.

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