Opposing Fates For Most Volatile Sector ETFs

August 22, 2014

Volatile biotech ETF surges higher as equally volatile natural gas ETF plummets.

FCG_IBB_30Day_TR

Chart courtesy of StockCharts.com

Where there is volatility there is opportunity. Nowhere is the double-edged sword of volatility better highlighted than in the returns of the two most volatile sector ETFs over the past 30 days.

The First Trust ISE-Revere Natural Gas ETF (FCG | A-99) and the iShares Nasdaq Biotechnology ETF (IBB | A-30) were the two most volatile ETFs over the past 30 days, with an annualized standard deviation of 21 percent of their respective share prices.

IBB flew to a 3 percent gain over the past 30 trading days as it rode the wave of surging biotech prices amid Ebola-fears and a risk-on mode that pumped up the sector over the past two weeks. IBB holds a basket of 122 biotechnology and pharmaceutical companies that are listed on Nasdaq.

Meanwhile, FCG slide nearly 7 percent over the past 30 trading days after being down as much as 10 percent in the period. FCG and the natural gas companies that it holds are struggling with falling natural gas prices as inventories rise and demand slumps.

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