Many investors are probably sick of hearing that the shares of the Magnificent 7 have had a great run in recent months. But which stocks have actually benefited from the tech boom in their shadow? And who performed in the opposite direction? Pascal Kielkopf took a conscious look at the second row – and the other end of the spectrum.
The capital market analyst from HQ Trust calculated the weekly returns of the Bloomberg Magnificent 7 Index, which contains the shares of Apple, Nvidia, Alphabet, Meta, Amazon, Tesla and Microsoft equally weighted – as well as the returns of all other shares in the S&P 500 – for the period from the beginning of January 2023 to the end of January 2024. He then determined the respective correlations.
– “Unsurprisingly, it is mainly technology stocks that are closely linked to the performance of the Big 7.”
– “19 of the 20 stocks with the highest correlation to the Magnificent 7 are from the semiconductor or software segment.
– “The only exception in the top 20 is lithium producer Albemarle.”
At the bottom of the table, among the stocks with the most negative correlation to the Magnificent 7, there are far more sectors:
– “The 20 stocks that have moved most strongly in the opposite direction to the Magnificent 7 come from 6 different industry groups.”
– “However, the 6 companies with the highest negative correlation include 5 insurance companies: Hartford, Allstate, Chubb, Travelers and Globe Life.”
– “The top 20 include a number of well-known companies, such as brand giants Johnson & Johnson and Colgate-Palmolive, oil giant Exxon Mobil and Warren Buffett’s Berkshire Hathaway.”
However, some companies also developed differently to the majority of their sector:
– “Within the technology sector, there are also companies with a negative correlation to the Magnificent 7: especially traditional companies such as IBM, Motorola or HP.”
– “There are also free riders in the financial sector, such as Coinbase, MSCI and Moody’s.”
