March 27, 2020
Low Beta Stocks
“A stock’s beta measures how volatile it is compared to the overall market.
The overall market has a beta of 1.0. A stock’s beta is ranked according to how much the stock price deviates from the overall market. If a stock’s beta is:
- Higher than one: The stock price typically experiences larger price fluctuations than the overall market.
- Less than one: The stock price typically experiences lower price fluctuations than the overall market.
- Equal to one: The stock price typically fluctuations at the same rate as the overall market.
Stocks with a high beta value are viewed as riskier than stocks with low beta values”.
Stocks with low volatility
A daily screener for low beta stocks can be found at the mentioned stock market source.
Low beta stocks are defensive stocks suitable for periods of high market volatility
Volatility in the US stock market and other financial markets is now at high levels, and this increases the risk of investing and trading. Low beta stocks tend to have less volatility compared to other stocks with a high beta, thus they can be part of a diversified portfolio. Stock trading, stock investing are about managing risk, and these low beta stocks can help mitigate the risk.