Cite This Comparison
"S&P 500 vs Nasdaq 100 (SPY vs QQQ): Returns, Risk & Volatility (2025)." Gale Finance, December 31, 2025. https://www.gale.finance/compare/spy-vs-qqq-2025 Free to use with attribution. Please link back to this page or gale.finance.
Analysis period: 2025-01-01 to 2025-12-31
Relative Performance of SPY vs QQQ (Normalized to 100)
Normalized to 100 at start date for comparison
Key Takeaways
- Total Return: SPY delivered a +18.0% total return, while QQQ returned +21.0% over the same period. QQQ outperformed on total returns.
- Risk-Adjusted Return (Sharpe Ratio): QQQ had a higher Sharpe (0.75 vs 0.74), indicating better risk-adjusted performance.
- Volatility (Annualized): QQQ was more volatile, with 23.6% annualized volatility, versus 19.5% for SPY.
- Maximum Drawdown: SPY's maximum drawdown was -18.8%, while QQQ experienced a deeper drawdown of -22.8%.
S&P 500 vs Nasdaq 100 Correlation
S&P 500 and Nasdaq 100 were strongly correlated in 2025. With a correlation of 0.95, these assets tended to move together, limiting diversification benefits.
For portfolio construction, this strong correlation means holding both SPY and QQQ provides limited risk reduction — they're likely to decline together in downturns.
| Metric | Metric | Value |
|---|---|---|
| Current (30-day) | 0.94 | |
| Average (full period) | 0.95 | |
| Minimum | 0.85 | |
| Maximum | 0.99 |
Correlation measures how closely two assets move together. Values near +1 indicate strong co-movement, near 0 indicates independence, and negative values indicate inverse movement.
Investment Comparison
If you invested $10,000 in each asset on January 1, 2025:
Difference: $299.741 (QQQ ahead)
S&P 500 and Nasdaq 100: Risk Analysis
S&P 500 experienced its maximum drawdown of -18.8% from 2025-02-19 to 2025-04-08. It has not yet recovered to its previous peak.
Nasdaq 100 experienced its maximum drawdown of -22.8% from 2025-02-19 to 2025-04-08. It has not yet recovered to its previous peak.
Smaller drawdowns and faster recoveries indicate lower downside risk and greater resilience during market stress.
Sharpe Ratio of SPY and QQQ
Sharpe ratio measures return per unit of risk (volatility). A higher Sharpe indicates better risk-adjusted performance. QQQ had a higher Sharpe (0.75 vs 0.74), indicating better risk-adjusted performance.
A Sharpe above 1.0 is generally considered good, above 2.0 is excellent. Negative Sharpe means the asset underperformed the risk-free rate. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).
Sortino Ratio of SPY and QQQ
Sortino ratio measures return per unit of downside risk. Unlike Sharpe, it only penalizes negative volatility. QQQ had better downside-adjusted returns.
A higher Sortino is better. It's particularly useful for assets with asymmetric volatility (big gains, smaller losses). Downside volatility: SPY 15.3% vs QQQ 18.1%. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).
Full Comparison of S&P 500 vs. Nasdaq 100 (2025)
| Metric | SPY | QQQ |
|---|---|---|
| Total Return | +18.0% | +21.0% |
| Annualized Volatility | 19.5% | 23.6% |
| Sharpe Ratio | 0.74 | 0.75 |
| Sortino Ratio | 0.94 | 0.99 |
| Max Drawdown | -18.8% | -22.8% |
| Avg Correlation to S&P 500 | N/A | N/A |
S&P 500 vs Nasdaq 100: Frequently Asked Questions
Which had higher volatility: SPY or QQQ?
QQQ showed higher volatility at 23.6% annualized, compared to 19.5% for SPY During 2025. Higher volatility meant larger price swings in both directions.
Did SPY provide diversification when held with QQQ?
SPY and QQQ were strongly correlated in 2025, with an average correlation of 0.95. This strong correlation limited diversification benefits.
Which had better risk-adjusted returns: SPY or QQQ?
QQQ showed better risk-adjusted performance with a Sharpe ratio of 0.75 versus SPY's 0.74 During 2025.
Could SPY and QQQ have been combined in a portfolio?
Yes, though allocation sizing mattered. Their strong correlation provided limited risk reduction since they tended to move together. QQQ's higher volatility (23.6%) meant even small allocations can materially impact overall portfolio risk.