How to Hedge a Mag 7 Stock Using Its Nasdaq Correlation
Jermal Chandler, Mike Butler, and Kai Zheng from tastylive research explored the decreasing correlation between Apple and the Nasdaq 100, noting that a CNBC report indicated a 30-day correlation of -0.86. While long-term correlations have historically been positive, recent periods show Apple trading independently, with its beta against the Nasdaq 100 significantly decreasing. The study highlighted that hedging Apple positions with the Nasdaq 100 has become increasingly difficult due to this divergence.
The diminishing correlation between Apple and the Nasdaq 100 means traditional hedging strategies using the index are less effective, potentially increasing portfolio volatility for traders who rely on these correlations.
The episode also briefly touched on intraday price movements in the S&P 500 and the performance of other Mag 7 stocks relative to the semiconductor sector.