ES, NQ, YM, RTY: How Correlated Are the Index Futures You're Trading Together?

A trader who goes long 1 ES contract and long 1 NQ contract in the same session often thinks of it as two trades. On the days that matter most for account risk, it behaves like one trade with a bigger multiplier attached. ES tracks the S&P 500, NQ tracks the Nasdaq-100, YM tracks the Dow Jones Industrial Average, and RTY tracks the Russell 2000. Four different index baskets, four different tickers, four different lines on the quote screen. But all four are broad US equity-market benchmarks, and on most trading days they move for the same reasons at close to the same time.

Are ES, NQ, YM and RTY Actually Correlated?

The short answer is yes, in the sense that matters for risk management, though not perfectly and not identically across every timeframe. ES, NQ and YM are all large and mega-cap benchmarks; a meaningful share of the individual companies that move the S&P 500 also move the Nasdaq-100 and, to a lesser extent, the Dow. RTY is the outlier of the four, since the Russell 2000 tracks small-cap companies, roughly the 1,001st through 3,000th largest US firms by market capitalization, rather than the household names that dominate the other three indices. That difference in composition is exactly why RTY can drift away from the other three over longer stretches, even while still tending to move in the same direction on any single macro-driven session.

This lines up with what regulators say about correlation generally, not about futures specifically. FINRA's investor education material on concentration risk states plainly that investments "within the same industry, geographic region or security type tend to be highly correlated, meaning that what happens to one investment is likely to happen to the others." ES, NQ, YM and RTY are the same security type (US equity index futures), the same geography (US), and overlap heavily in the underlying companies that drive them. That is the textbook setup for high correlation, worth taking at face value rather than assuming four different tickers must mean four different risks.

The exception proves the rule. Multiple market summaries covering 2023 noted the S&P 500 gaining substantially more than the Russell 2000 for the year, even though the Russell 2000 also posted a real double-digit gain of its own, a reminder that small-cap and mega-cap indices can decouple in magnitude over months even though they typically move in the same direction within any single session. Treat any specific percentage as approximate and confirm current figures yourself rather than trading off a remembered statistic, but the direction of the lesson holds: correlation on a given day is not the same guarantee as correlation over a quarter. The same logic applies inside the large-cap group too. As a smaller number of large technology companies have come to dominate the S&P 500's own index weighting, its correlation with NQ has tended to tighten, while its relationship to YM, which is price-weighted across only 30 industrial names, can drift in a different way. Even among these four contracts, the degree of correlation is not fixed, it moves with index composition and sector weighting over time, not only with RTY's small-cap makeup, so it is worth checking the current relationship yourself rather than assuming today's pattern holds indefinitely.

If you are still deciding which single instrument fits your account size and trading style, that is a different question, covered in our comparison of ES, NQ, MES and MNQ. This article assumes you already trade one or more of the four and is about what happens the moment you hold more than one of them at once.

These multipliers are stable, exchange-set constants and have held at these values for a long time, but always confirm the current, official contract specifications on CME Group's own contract pages before sizing a real trade, since exchanges do occasionally adjust contract terms and margin requirements change far more often than multipliers do.

Why Do These Four Index Futures Move Together?

The mechanism is not mysterious. All four indices are priced off the same handful of macro inputs that dominate US equity markets on any given day: where interest rates are expected to go, whether the broad market is in a risk-on or risk-off mood, and what the major scheduled economic releases said. A hotter than expected inflation print, a Fed statement that reads more hawkish than the market priced in, or a surprise in the monthly jobs report does not target one index and leave the others alone. It moves the discount rate and the risk appetite that every US equity benchmark is priced against, more or less simultaneously.

There is also a structural reason underneath the macro one. A meaningful share of the largest companies in the S&P 500 are also top holdings in the Nasdaq-100, and several of them sit in the Dow as well. When those specific mega-cap names move hard on earnings or a rate-sensitive headline, they pull more than one of these three indices with them at the same time, independent of anything happening in the wider economy that day.

Four tickers tracking four different baskets can still add up to one bet if the same headline moves all four the same way.

RTY still typically participates in these same-day moves, since small-cap companies are not immune to rate expectations or risk sentiment, arguably the opposite: smaller companies tend to be more sensitive to financing costs and credit conditions than the mega-caps that dominate the other three indices. What makes RTY diverge over longer periods is less about any single session and more about small-cap-specific factors: credit availability, domestic-revenue concentration, and different sensitivity to the rate cycle. On the day-to-day timeframe that actually matters for a funded account's daily-loss limit, though, RTY is still, in practice, part of the same directional herd more often than not.

What Happens When You Stack Long ES and Long NQ Together?

Here is where the mistake actually costs money. A trader opens 1 ES contract long and 1 NQ contract long, treating them mentally as two separate, smaller trades rather than one combined position. A broad risk-off session hits, the kind driven by a hawkish rate surprise or a risk-sentiment shock that hits every major US index at once, exactly the scenario ES, NQ, YM and RTY are typically correlated for.

ES drops 10 points against the position: 10 points x $50 per point = $500 lost on the ES leg alone. In the same window, NQ drops 25 points, a larger point move but a comparable dollar move given its lower multiplier: 25 points x $20 per point = $500 lost on the NQ leg. The two legs do not offset or average, since both moved the same direction at the same time. The account absorbs the full sum: $500 + $500 = $1,000 exactly, not $500, and not something in between.

That $1,000 is not a coincidence of correlated markets misbehaving, it is what typically correlated markets are supposed to do on a risk-off day. The trader who sized "half" of a comfortable risk budget into ES and "half" into NQ, believing the two allocations were independent of each other, was actually looking at one directional bet the entire time. The account did not get two chances for one leg to cushion the other. It took one full-sized hit that happened to arrive through two order tickets instead of one.

This is the core error worth fixing before it costs a funded evaluation: two tickers is not the same thing as two independent risks. On a day when ES and NQ move together, which is the typical case rather than the exception, it is one risk, expressed twice.

How Does Adding RTY Change the Combined Loss?

Add a third leg and the same mechanism keeps compounding instead of diversifying. Take the identical setup, long 1 ES and long 1 NQ, and add long 1 RTY, on the same risk-off session. RTY drops 10 points: 10 points x $50 per point = $500 lost on the RTY leg. Add that to the earlier two: $500 (ES) + $500 (NQ) + $500 (RTY) = $1,500 total, on a day when all three indices simply did what typically correlated US equity benchmarks do together.

Three tickers that track three different stock baskets, one large-cap, one tech-heavy, one small-cap, produced one concentrated directional loss roughly three times the size of any single leg, because all three responded to the same macro shock in the same direction at close to the same time. Adding YM as a fourth leg would extend the same pattern further: another leg, another full-sized exposure to the same underlying bet, not a smaller slice of a supposedly diversified portfolio.

What Does Genuine Diversification Actually Require?

Genuine diversification is not about the number of tickers on your position screen, it is about how those positions behave relative to each other when something happens. FINRA's own guidance on asset allocation and diversification frames the actual benefit as coming from assets that are "uncorrelated," meaning they "react to economic events in ways independent of other assets in your portfolio." The example FINRA uses to illustrate this is stocks and bonds, two asset classes that often move in different directions from each other, not two stock indices that move in the same direction from each other.

By that standard, ES, NQ, YM and RTY do not diversify each other, since they are the same asset class, the same security type, and the same geography, exactly the combination FINRA's concentration-risk guidance flags as tending toward high correlation rather than away from it. Genuine diversification for a futures account has to come from somewhere with a meaningfully different return driver: a different asset class entirely, such as certain commodities that respond to their own supply and demand cycle rather than to US equity risk sentiment, or a deliberately uncorrelated trading strategy that is not simply another directional bet on the same macro theme. Neither of those is guaranteed to be low-correlation either; correlations shift over time and across regimes, so the honest position is to check the actual relationship rather than assume a different ticker automatically means a different risk.

This is a different kind of diversification question than the one covered in our piece on trading multiple prop firms, which is about spreading business and counterparty risk across separate funded-account providers. Running accounts at several firms reduces the damage if one firm changes its rules, misses a payout, or shuts down, but it does nothing to reduce correlation risk if the same correlated ES-plus-NQ position is open on every one of those accounts at once. Firm-level diversification and instrument-correlation diversification solve two different problems, and fixing one does not fix the other.

How Do Funded-Account Drawdown Rules Treat Correlated Positions?

This is where the mistake stops being theoretical and starts costing evaluations. Prop-firm daily-loss limits and drawdown rules are, across the industry's typical program design, calculated against total account equity or balance, not against each open position separately. There is no standard per-instrument drawdown allowance in a funded program; there is one number for the account, and every open position draws from it at the same time.

Say a trader mentally earmarks a $500 risk allowance to the ES idea and a separate $500 risk allowance to the NQ idea (a hypothetical, illustrative number only, not any real firm's actual limit), believing they have spread $1,000 of risk across two independent bets. If ES and NQ move together on the session in question, which is the typical case given their correlation, the account does not experience two independent $500 draws that might partially cancel. It experiences one $1,000 draw against a single account-level daily-loss or drawdown number, because that number is computed off the whole account, not symbol by symbol.

It is also worth being precise about what is and is not regulated here. Funded evaluation and funded-account programs are proprietary business arrangements between a trader and a firm, not standardized retail futures brokerage accounts registered with the National Futures Association the way a traditional futures brokerage account is. Where a firm ultimately routes live trades through a registered FCM or broker, normal CFTC and NFA-level protections can still apply to that underlying brokerage relationship, but the firm's own evaluation rules, drawdown formulas and payout terms are its own contract terms, not a regulator-mandated structure. That is exactly why the aggregation method for correlated positions is worth reading in your specific firm's rules rather than assuming it works the same way everywhere.

This is exactly the gap that position-sizing frameworks like the 1% rule for funded accounts are meant to close, but only if the rule is applied to combined exposure across correlated instruments rather than to each ticker in isolation. Sizing ES at 1% of account risk and NQ at a separate 1% of account risk, on the assumption that they are independent bets, quietly doubles the real risk being taken relative to what the rule intended, precisely because the two legs are typically correlated rather than independent.

Is Trading Multiple Correlated Index Futures Ever Fine?

None of this means trading more than one index future at a time is a mistake. Active traders do it deliberately, and for reasonable reasons: ES and NQ together are two of the deepest, most liquid futures markets in the world, and some strategies specifically want that liquidity across sessions when a single-instrument setup would leave a trader waiting on thinner volume. Others trade different indices at different times of day, since overnight liquidity and volatility characteristics are not identical across ES, NQ, YM and RTY. Others are running genuine relative-strength or relative-value ideas, for instance being long the more tech-sensitive NQ against short YM, which is a structurally different position from being long both, since the two legs are working against each other rather than adding in the same direction.

The distinction that matters is not whether multiple correlated instruments are open, it is whether they are sized as one combined directional bet or as several independent smaller ones. Same-direction legs across correlated instruments should be sized, from a risk-budget standpoint, as a single position with a multiplier equal to the number of legs, not as separate allocations that happen to share a risk-off day. Opposite-direction spread trades are a different animal, with genuinely reduced net directional exposure, though margin treatment for the individual legs still varies by broker and firm, so confirm how your specific account handles a spread before assuming it is margined or risk-counted as a single reduced-risk unit.

What Happens When a Copier Mirrors a Correlated Multi-Instrument Book?

This matters just as much, arguably more, for anyone copying someone else's trades rather than placing their own. A trade copier that mirrors a master account's positions across follower accounts replicates whatever book the master is actually holding, correlated or not. If the master is running a same-direction book across ES, NQ, YM and RTY at once, effectively one concentrated bet expressed across four tickers, every follower account that mirrors that master inherits the exact same concentrated, correlated exposure, not a diversified version of it.

Per-account position sizing changes the dollar amount each follower risks, it does not change the correlation structure of what is being copied. A follower account sized smaller than the master still ends up holding the same four-legged, same-direction bet, just at a smaller multiple. An account owner who assumes the master trades several instruments so their copied risk must be spread out is making the identical mistake covered throughout this article, just one step removed from the decision that created the exposure in the first place. Understanding that ES, NQ, YM and RTY typically move together is just as relevant to someone evaluating a signal provider's multi-instrument book as it is to someone placing the trades directly.

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