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Best Stocks With Low Volatility

What is a low-volatility stock?

A lower volatility means that a security’s value does not fluctuate dramatically, and tends to be more steady. One way to measure an asset’s variation is to quantify the daily returns (percent move on a daily basis) of the asset.

Is low-volatility or high volatility better?

The first striking takeaway: US high-volatility funds did much better than their low-volatility peers. The average high-volatility fund earned an annualized return of 15.89% on a post-tax basis over the past 10 years, compared to just 5.16% over the same period for the average low-beta fund.

How do you know if a stock has low volatility?

A stock with a price that fluctuates wildly—hits new highs and lows or moves erratically—is considered highly volatile. A stock that maintains a relatively stable price has low volatility.

Is Apple a low volatile stock?

Apple Inc has a volatility of 1.23 and is 1.71 times more volatile than DOW. 10 of all equities and portfolios are less risky than Apple. Compared to the overall equity markets, volatility of historical daily returns of Apple Inc is lower than 10% of all global equities and portfolios over the last 90 days.

Is Microsoft a low volatility stock?

Microsoft Corp has a volatility of 1.23 and is 1.81 times more volatile than DOW. Compared to the overall equity markets, volatility of historical daily returns of Microsoft Corp is lower than 10% of all global equities and portfolios over the last 90 days.

What is considered low volatility?

Volatility is a measure of how much a stock price moves, not just the direction in which it moves. Broad-market ETFs and utility stocks, for example, tend to have low volatility, somewhere in the range of 10 to 20.

Healthcare stocks or technology companies might have higher volatility in general, 50 or 80 or 100.

What percentage is low volatility?

A stock’s historical volatility is also known as statistical volatility (SV or HV); the terms are used interchangeably. A stock with an SV of 10% has very low volatility; 35% is considered not very volatile; 80% would be quite volatile.

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What are the best low volatile stocks?

According to ETF Database, there are 11 low-volatility ETFs with assets above $1 billion. Here are 10 safe stocks from the top five equity ETFs by assets:

  1. Microsoft (NASDAQ:MSFT)
  2. Johnson & Johnson (NYSE:JNJ)
  3. Unilever (NYSE:UL)
  4. National Grid (NYSE:NGG)
  5. Verizon Communications (NYSE:VZ)
  6. Expeditors International of Washington (NASDAQ:EXPD)
  7. McDonald’s (NYSE:MCD)
  8. Visa (NYSE:V)
  9. Alibaba (NYSE:BABA)
  10. Taiwan Semiconductor (NYSE:TSM)

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Frequently asked questions

To make money in the financial markets, there must be price movement. The speed or degree of change in prices (in either direction) is called volatility. The good news is that as volatility increases, the potential to make more money quickly also increases. The bad news is that higher volatility also means higher risk.

Any stock that has a beta less than 1.0 can be said to be less volatile than the broader market. What this means in practice is that low-beta stocks tend to lag the broader market when stocks are going up, but – critically – they also hold up better when the S&P 500 is in decline.

Low volatility investment strategies exploit the low volatility anomaly. A generic low volatility strategy selects stocks based on the volatility of past returns. From an investor’s point of view, such a quantitative strategy offers higher risk-adjusted returns as measured by the Sharpe Ratio.

Beta is a measure of a stock’s volatility in relation to the overall market. If a stock moves less than the market, the stock’s beta is less than 1.0. High-beta stocks are supposed to be riskier but provide higher return potential; low-beta stocks pose less risk but also lower returns.

The least volatile sectors were Consumer Staples, Utilities and Health Care. Why does that matter? Volatility in trading is synonymous with probability—the more volatile the sector, the higher the probability for movement, and vice versa.

If the stock’s traded volume is high, but there is a balance of orders, then the volatility is low. … However, if the earnings report is lower than expected, then the stock value will go down.

There are three U.S. equity sectors with betas well below 100%: consumer staples (XLP), healthcare (XLV), and utilities (XLU). It is often believed that low-beta equities have very low average returns.

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