Least Volatile Stocks Frequently Asked Questions
What are low volatility stocks today?
Low volatility stocks appeal to those investors who are not too comfortable with increase in volatility of market stock. Therefore, a lot of investors and traders consider low-risk stocks which have a tried and tested track record of consistent and steady performance over a tenure. In fact, it has been observed that the low volatile stocks often generate good returns than stocks with academic research findings. Some of the low volatile stocks today can be found at stock earning tool here. You can search and refine the tickers on the basis of factors that impact stock volatility.
What exactly is volatility and is it easy to spot stocks with low volatility?
Volatility, in simple terms, means swings in a stock value over a particular time. A lot of investors opine that high volatile stocks often yield higher returns because of a huge amount of risk overriding it. However, that’s not the case always. Sometimes, stocks with lesser swing in price over time can yield better returns. These are the stocks with proven track records of positive and steady returns. Low volatility stocks today aren’t so easy to spot, unless you really understand the factors that influence volatility.
How can I spot low volatility stocks today?
Determining the stock volatility isn’t so easy. But there is one crucial parameter that will help you refine your search. This parameter is called BETA. Beta figure is a determinant of volatility of a stock. This compares with S&P 500, which keeps a track of some of the largest companies trading in a stock market. Stocks with beta value “1” indicate that the price is moving in line with S&P 500. The value of “1.25” indicates that a stock is 25% more unpredictable in comparison with index. Most of the brokerage firms on the Internet indicate a beta value of company. However, you must also rely on the industry beta.
Which sectors are mostly low volatile?
Some sectors are by nature, always low volatile. The stocks belonging to these sectors must be kept an eye on. Food, beverages and household items are three main sector which are often low volatile. This is so because the products of these sectors belong to essential commodities, which is why their sale remain mostly consistent, unless in case of something out of the blue.
Which popular stocks belong to low volatile category?
Some stocks, over a consistent performance, have established themselves as popular low volatility stocks of all times. These include Procter and Gamble [NYSE: PG], Coca-Cola [NYSE: KO], Lockheed Martin [NYSE: LMT] and Kellogg Company [NYSE: K].
What are some of the least volatile funds today?
If low volatility stocks today do not appeal to you much, you can also expect some really good exposure through ETFs and mutual funds, which especially invest in low volatility stocks today and most of the times. Some of the popular low volatility funds in 2021 include Invesco S&P 500 Low Volatility ETF [NYSE: SPLV], iShares MSCI Minimum Volatility ETF [NYSE: USMV] and Fidelity Low Volatility Factor ETF [NYSE: FDLO].
Why does low volatile nature of stock matter to investors?
Simply speaking, more volatility in the stock price indicates that it has to gain even more just so as to be even. Volatility can spike a stock price, wile also considerably plunging its price. In a long term, it becomes harder for any high risk and most volatile stocks to have a good come back of what has been lost. Low volatility stocks matter to investors so as to have a consistent portfolio with versatile returns.
Are there same strategies applied over low volatility stocks today?
No. that’s not true. There is a “pure approach” and an approach which considers sector constraints to calculate volatility of stocks. You must learn about different approaches and how to derive at them, so as to have a suite of different products in your low volatility stocks today.
Are investors of low volatility stocks consider conservative?
There is no set pattern to investment. What works best for you, might not even function for someone else. A good portfolio is a mix and match of different stocks. Having said that, investors who choose low volatility stocks today may not be conservative. Lower volatility is a sign of remaining invested in stocks even when there are correction periods.
