Please explain the difference between the NASDAQ and NASDAQ 100?

Mystical: Please explain the difference between the NASDAQ and NASDAQ 100?
So the NASDAQ is composed of technology and growth companies but the NASDAQ 100 is composed of large caps and non financial companies. How are these two highly correlated? This seems to be the best ETF to invest in if you want NASDAQ performance. Why? What risk is not eliminated if you want to hedge against NASDAQ volitility by shorting the NASDAQ 100?

Answers and Views:

Answer by Charley B
The NASDAQ (acronym of National Association of Securities Dealers Automated Quotations) is the largest American stock exchange, with approximately 3,200 companies.

The NASDAQ-100 is a *stock market index* of 100 of the largest domestic and international non-financial companies listed on the NASDAQ stock exchange. The NASDAQ 100 is basically 100 companies which are thought to represent the entire population of 3200 NASDAQ companies.

Answer by muncie birder
Wow. Such a complicated question for so early in the morning.

The first responder has given you a concise answer that is exact. I will elaborate just a little. As already stated the total NASDAQ consists of over 3200 companies that are traded. The NASDAQ 100 represents only a small portion of the total, but that small portion probably represents 80% of the volume traded on the NASDAQ. I am just guessing. And of course it is tech heavy with MSFT, INTC, AAPL, CSCO, DELL, ORCL, and GOOG making up most of the trading volume and most of the market cap also. I imagine that NASDAQ volitility is made up almost completely by the 100 if not those 7 stocks mentioned above. Most of the companies traded on the NASDAQ have much much less volume of trading than those above. Many have a market cap of less than 100 million.