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Don’t panic about market volatility: Buy 5 low-beta stocks

Behind a successful investor is a lot of homework. There is no thumb rule that for getting lucrative returns, one should invest in risky stocks although the strategy works well when the market is bullish.

We have created an investment strategy which proves that less-risky stocks could also give handsome returns if some parameters are taken into account.

Beta Understanding

Beta measures the volatility or risks to a security relative to the market (we are considering the S&P 500 here). That is, beta measures the extent to which the price of a stock moves with respect to the market.

If the beta is equal to 1 it means that the stock is as volatile as the market. So, a stock is relatively more volatile if it has beta greater than 1 and less volatile if beta is less than 1.

For example, if the beta is 1.8 then the stock will witness 80% more movement than the market.  Hence, we can say that if the market goes up, the stock will outperform by 80%. Conversely, if the market plunges, the stock will lose much more value than the market.

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Zacks Investment Research

Zacks Investment Research is characterized by a team of experts who are passionate about your investing success and is focused on sharing the same reliable investment research they would want for themselves.