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Does SPY follow ES?

Last Updated on 11 September, 2023 by Samuelsson

Yes, the SPY (SPDR S&P 500 ETF) tends to closely follow the movements of the ES (E-mini S&P 500 futures contract). The ES futures contract is based on the S&P 500 index and is a popular instrument for trading the broader market. The SPY ETF, on the other hand, is an exchange-traded fund that tracks the performance of the S&P 500 index.

Since both the ES futures contract and the SPY ETF are based on the S&P 500 index, they generally move in tandem. Changes in the ES futures contract’s price and volume can provide insights into market sentiment and are often used by traders to gauge the direction of the overall market. As a result, many investors and traders consider the movement of ES futures when analyzing the SPY and vice versa.

Correlation between SPY and ES Text

The SPY and ES demonstrate a strong correlation due to their shared underlying asset, the S&P 500 index. This correlation means that when the ES futures contract experiences price movements, the SPY ETF tends to follow suit. This relationship makes it crucial for investors and traders to monitor the ES futures contract as it can provide valuable insights into the potential direction of the SPY and the broader market.

Factors Influencing the SPY-ES Relationship

While the SPY and ES generally move in tandem, it is important to recognize that other factors can influence their relationship. Market conditions, economic indicators, geopolitical events, and investor sentiment can impact the correlation between the two instruments. For example, during periods of heightened volatility or significant news announcements, the correlation may temporarily weaken as market participants adjust their positions. It is therefore advisable to consider these additional factors alongside the SPY-ES relationship when analyzing and making investment decisions.

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