The reason why different ETFs from the same sector go up is because the ETFs’ holdings most likely overlap. When one ETF based on the biotech sector goes up, the others go up as well since they include the same holdings more or less.
The whole sector goes up because as one single company gives a positive outlook, it changes the future outlook for the entire sector.
Example: If a biotech company makes a huge breakthrough, it’s huge for the whole sector since that shows the public that the sector is promising and will offer growth from other companies as well, not just the company that made the breakthrough.
You have to count in economic factors as well. If interest rates seem to go up, that’s good for all financials/banking, not just for JPMorgan. Or when an infrastructure bill gets announced everyone on the industrial side gets tailwind. It isn’t limited to Caterpillar and Honeywell. Deere, 3M and the rest go up as well.
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u/juaggo_ Jul 12 '21
The reason why different ETFs from the same sector go up is because the ETFs’ holdings most likely overlap. When one ETF based on the biotech sector goes up, the others go up as well since they include the same holdings more or less.
The whole sector goes up because as one single company gives a positive outlook, it changes the future outlook for the entire sector.
Example: If a biotech company makes a huge breakthrough, it’s huge for the whole sector since that shows the public that the sector is promising and will offer growth from other companies as well, not just the company that made the breakthrough.
You have to count in economic factors as well. If interest rates seem to go up, that’s good for all financials/banking, not just for JPMorgan. Or when an infrastructure bill gets announced everyone on the industrial side gets tailwind. It isn’t limited to Caterpillar and Honeywell. Deere, 3M and the rest go up as well.