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Bet on These 4 Low-Beta Stocks to Combat Market Volatility

1 11 15
08.10.2021

The Senate's recent approval of a bill will possibly save the United States from the risks of default on its debt in the next few weeks. However, uncertainty remains since the agreement is meant for the debt ceiling extension until Dec 3, providing investors with short-term relief.

Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against choppy market conditions.

Beta measures the volatility or risk of a particular asset in comparison to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.

If a stock has beta of 1, then the price of the stock will move with the market. So, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.

For example, if the market offers a return of 20%, a stock with beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.

We have taken beta between 0 and 0.7 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a........

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