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DOW   28,725.51
QQQ   267.26
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Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
An All-In-One Guide for Trading Metals (Ad)pixel
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Can A.I. Launch You into Your Next Trading Frontier? (Ad)pixel
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Can A.I. Launch You into Your Next Trading Frontier? (Ad)pixel
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
An All-In-One Guide for Trading Metals (Ad)pixel
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Can A.I. Launch You into Your Next Trading Frontier? (Ad)pixel
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Can A.I. Launch You into Your Next Trading Frontier? (Ad)pixel
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
An All-In-One Guide for Trading Metals (Ad)pixel
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Can A.I. Launch You into Your Next Trading Frontier? (Ad)pixel
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Can A.I. Launch You into Your Next Trading Frontier? (Ad)pixel
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears

Low Beta Stocks

Beta is the a calculation that measures the relative volatility of a stock in correlation to a particular standard. For U.S. stocks that standard is usually, but not always, the S&P 500. Beta is a form of regression analysis and it can be useful for investors regardless of their risk tolerance. Beta is considered one of the few data points that can be beneficial for practitioners of both fundamental analysis and technical analysis. This page lists stocks that have unusually low beta calculations, meaning there is little correlation between the price moves of these stocks and the S&P 500. Learn more about low beta stocks.

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CompanyCurrent PriceBetaPE RatioMarket CapVolumeAverage VolumeIndicator(s)
William Penn Bancorporation stock logo
WMPN
William Penn Bancorporation
$11.37
-1.8%
0.0137.90$169.74 million78,57122,225Short Interest ↑
High Trading Volume
BM Technologies, Inc. stock logo
BMTX
BM Technologies
$6.69
+4.2%
0.025.11$78.57 million45,94340,381Gap Up
Mission Produce, Inc. stock logo
AVO
Mission Produce
$14.46
-1.4%
0.0242.53$1.04 billion112,078123,491Positive News
Palomar Holdings, Inc. stock logo
PLMR
Palomar
$83.72
-2.6%
0.0247.03$2.17 billion262,078187,438
Citizens Holding stock logo
CIZN
Citizens
$15.30
0.0210.41$85.74 million10,51112,608Short Interest ↑
News Coverage
Gap Up
PV
Primavera Capital Acquisition
$9.95
0.0228.43$534.81 million90,708238,936News Coverage
Sono-Tek Co. stock logo
SOTK
Sono-Tek
$7.02
-3.2%
0.0270.21$114.04 million24,01128,632News Coverage
Positive News
BioNTech SE stock logo
BNTX
BioNTech
$134.88
+1.0%
0.032.60$32.42 billion735,183810,413Analyst Report
Short Interest ↑
PAQC
Provident Acquisition
$9.98
+0.2%
0.0338.39$249 million109,30953,115Short Interest ↓
Positive News
High Trading Volume
Lancaster Colony Co. stock logo
LANC
Lancaster Colony
$150.28
-1.2%
0.0446.24$4.18 billion163,317142,885Short Interest ↓
Positive News
United Fire Group, Inc. stock logo
UFCS
United Fire Group
$28.73
-0.7%
0.0411.05$727.16 million148,79560,983Positive News
High Trading Volume
Globus Maritime Limited stock logo
GLBS
Globus Maritime
$1.26
0.050.62$13.38 million58,27585,554Positive News
Employers Holdings, Inc. stock logo
EIG
Employers
$34.49
+0.0%
0.0518.85$941.46 million96,075114,418Short Interest ↑
Professional Holding Corp. stock logo
PFHD
Professional
$25.94
-1.0%
0.0618.40$360.72 million132,20088,140Positive News
InnSuites Hospitality Trust stock logo
IHT
InnSuites Hospitality Trust
$1.92
-5.0%
0.0624.00$18.42 million2,0444,000Positive News
Chunghwa Telecom Co., Ltd. stock logo
CHT
Chunghwa Telecom
$35.53
-0.9%
0.0621.40$27.83 billion230,519220,272Short Interest ↓
News Coverage
Coterra Energy Inc. stock logo
CTRA
Coterra Energy
$26.12
+0.6%
0.067.26$20.66 billion7.83 million7.73 million
Artesian Resources Co. stock logo
ARTNA
Artesian Resources
$48.12
-0.7%
0.0825.87$457.23 million44,52051,921Positive News
N-able, Inc. stock logo
NABL
N-able
$9.23
-2.7%
0.08131.88$1.71 billion441,810250,741
Citrix Systems, Inc. stock logo
CTXS
Citrix Systems
$103.90
0.0840.12$13.18 billion01.85 millionPositive News
Frontline Ltd. stock logo
FRO
Frontline
$10.93
+0.9%
0.1035.26$2.41 billion2.57 million3.92 millionGap Down
Gravity Co., Ltd. stock logo
GRVY
Gravity
$46.82
-0.3%
0.106.48$326.49 million5,88515,157Short Interest ↑
Autohome Inc. stock logo
ATHM
Autohome
$28.76
-1.5%
0.1115.72$3.67 billion357,775466,009
QuidelOrtho Co. stock logo
QDEL
QuidelOrtho
$71.48
-0.7%
0.123.03$4.82 billion783,496675,689
Hormel Foods Co. stock logo
HRL
Hormel Foods
$45.44
-1.0%
0.1224.83$25.07 billion1.56 million1.71 millionDividend Announcement
Pathfinder Bancorp, Inc. stock logo
PBHC
Pathfinder Bancorp
$20.34
-4.0%
0.139.12$97.87 million6,3764,858Dividend Announcement
Short Interest ↑
Orange County Bancorp, Inc. stock logo
OBT
Orange County Bancorp
$38.50
-1.2%
0.1311.46$219.50 million6,71713,204Positive News
Weis Markets, Inc. stock logo
WMK
Weis Markets
$71.24
-1.8%
0.1316.12$1.95 billion71,84975,395
AMMO, Inc. stock logo
POWW
AMMO
$2.93
-1.0%
0.1414.65$346.20 million1.42 million1.12 millionPositive News
HMN Financial, Inc. stock logo
HMNF
HMN Financial
$22.40
+0.3%
0.1410.57$100.78 million1,8076,560Short Interest ↑
Positive News
Peoples Financial Services Corp. stock logo
PFIS
Peoples Financial Services
$46.84
-3.2%
0.167.59$346.85 million11,90114,378Positive News
Global Cord Blood Co. stock logo
CO
Global Cord Blood
$2.99
0.164.67$363.15 million0534,920Analyst Upgrade
Short Interest ↓
Southwest Gas Holdings, Inc. stock logo
SWX
Southwest Gas
$69.75
-2.3%
0.1628.59$4.77 billion422,246575,769Short Interest ↑
Citizens, Inc. stock logo
CIA
Citizens
$3.34
-0.3%
0.175.48$169.20 million108,29543,990High Trading Volume
Magyar Bancorp, Inc. stock logo
MGYR
Magyar Bancorp
$12.43
+0.2%
0.1811.95$88.01 million1,95713,177Short Interest ↑
Futu Holdings Limited stock logo
FUTU
Futu
$37.29
+2.4%
0.1818.83$5.47 billion1.51 million1.69 million
The Clorox Company stock logo
CLX
Clorox
$128.39
-3.6%
0.1834.51$16.40 billion1.49 million873,822
Village Super Market, Inc. stock logo
VLGEA
Village Super Market
$19.33
+0.5%
0.1911.93$279.70 million45,73537,260Positive News
Value Line, Inc. stock logo
VALU
Value Line
$43.90
+0.2%
0.1918.68$414.86 million3,2665,158News Coverage
Gap Down
Celularity Inc. stock logo
CELU
Celularity
$2.31
+0.9%
0.2011.00$316.73 million270,8551.25 millionShort Interest ↑
Safety Insurance Group, Inc. stock logo
SAFT
Safety Insurance Group
$81.56
-0.9%
0.2016.85$1.21 billion59,97065,055Short Interest ↓
News Coverage
Positive News
Healthcare Services Group, Inc. stock logo
HCSG
Healthcare Services Group
$12.09
-0.3%
0.2130.23$898.28 million946,960612,625Positive News
MultiPlan Co. stock logo
MPLN
MultiPlan
$2.86
+0.4%
0.2111.44$1.82 billion3.98 million1.67 millionHigh Trading Volume
SWK Holdings Co. stock logo
SWKH
SWK
$17.00
-0.2%
0.2117.53$218.47 million8,82214,246Positive News
Nathan's Famous, Inc. stock logo
NATH
Nathan's Famous
$63.67
+0.2%
0.2117.49$259.30 million2,7277,322Short Interest ↓
News Coverage
Ohio Valley Banc Corp. stock logo
OVBC
Ohio Valley Banc
$27.82
-1.1%
0.2111.59$134.23 million1,77114,024Short Interest ↑
News Coverage
Gap Up
The J. M. Smucker Company stock logo
SJM
J. M. Smucker
$137.41
-1.1%
0.2225.26$14.81 billion1.15 million722,975News Coverage
Natus Medical Incorporated stock logo
NTUS
Natus Medical
$32.96
0.2289.08$1.14 billion1,514325,002Analyst Report
News Coverage
International General Insurance Holdings Ltd. stock logo
IGIC
International General Insurance
$7.74
+4.2%
0.235.82$366.34 million53,70916,222Positive News
High Trading Volume
ACNB Co. stock logo
ACNB
ACNB
$30.04
-2.3%
0.239.66$262.19 million9,11414,559Short Interest ↓
News Coverage
Positive News
Perma-Pipe International Holdings, Inc. stock logo
PPIH
Perma-Pipe International
$9.45
-0.2%
0.2417.50$75.79 million3,1755,592Short Interest ↑
Atrion Co. stock logo
ATRI
Atrion
$565.00
0.2429.75$1.01 billion6,4575,256News Coverage
Positive News
Gulf Resources, Inc. stock logo
GURE
Gulf Resources
$3.36
-0.9%
0.254.36$35.50 million2,7248,638Analyst Downgrade
Short Interest ↓
News Coverage
Gap Down
Arko Corp. stock logo
ARKO
Arko
$9.39
+1.5%
0.2516.19$1.11 billion339,204363,350
Consolidated Edison, Inc. stock logo
ED
Consolidated Edison
$85.76
-2.2%
0.2518.77$31.08 billion3.12 million1.41 millionHigh Trading Volume
Mid-Southern Bancorp, Inc. stock logo
MSVB
Mid-Southern Bancorp
$13.40
-0.4%
0.2520.62$38.61 million2,295629Short Interest ↑
High Trading Volume
AMERISAFE, Inc. stock logo
AMSF
AMERISAFE
$46.73
-0.5%
0.2519.63$905.77 million81,81164,486Positive News
SciPlay Co. stock logo
SCPL
SciPlay
$11.76
+1.2%
0.2615.89$1.49 billion459,738183,826Short Interest ↑
High Trading Volume
OppFi Inc. stock logo
OPFI
OppFi
$2.30
+12.2%
0.261.11$224.86 million164,100135,713News Coverage
Global Indemnity Group, LLC stock logo
GBLI
Global Indemnity Group
$22.07
-1.3%
0.26-31.53$324.65 million3,6175,529Dividend Announcement
News Coverage
First Capital, Inc. stock logo
FCAP
First Capital
$25.71
-2.6%
0.267.84$89.03 million4,4912,393Short Interest ↑
Gap Down
John B. Sanfilippo & Son, Inc. stock logo
JBSS
John B. Sanfilippo & Son
$75.73
-0.9%
0.2614.23$880.54 million56,68658,043Analyst Upgrade
News Coverage
Positive News
Bank First Co. stock logo
BFC
Bank First
$76.48
+0.5%
0.2613.16$567.75 million14,46217,896Analyst Report
News Coverage
Utah Medical Products, Inc. stock logo
UTMD
Utah Medical Products
$85.31
-1.5%
0.2619.57$313.92 million5,2384,644
AcelRx Pharmaceuticals, Inc. stock logo
ACRX
AcelRx Pharmaceuticals
$0.21
0.270.72$31.23 million597,5091.73 millionPositive News
Greene County Bancorp, Inc. stock logo
GCBC
Greene County Bancorp
$57.27
-5.3%
0.2717.41$515.06 million21,31111,600Positive News
Meridian Bioscience, Inc. stock logo
VIVO
Meridian Bioscience
$31.53
-1.2%
0.2731.85$1.40 billion349,200373,788Positive News
Columbia Financial, Inc. stock logo
CLBK
Columbia Financial
$21.13
-0.9%
0.2824.86$2.36 billion103,045131,906News Coverage
CMS Energy Co. stock logo
CMS
CMS Energy
$58.24
-2.5%
0.2812.80$17.33 billion3.71 million1.64 millionHigh Trading Volume
United-Guardian, Inc. stock logo
UG
United-Guardian
$11.36
-4.7%
0.2814.20$54.76 million8,7547,765Analyst Report
News Coverage
ProAssurance Co. stock logo
PRA
ProAssurance
$19.51
+4.5%
0.2827.10$1.01 billion540,923348,385News Coverage
WEC Energy Group, Inc. stock logo
WEC
WEC Energy Group
$89.43
-2.6%
0.2820.65$28.96 billion2.22 million1.24 millionNews Coverage
Atlantic American Co. stock logo
AAME
Atlantic American
$2.86
-4.0%
0.2926.00$60.80 million1,9394,061Short Interest ↓
News Coverage
360 DigiTech, Inc. stock logo
QFIN
360 DigiTech
$12.82
+1.7%
0.292.62$1.92 billion436,150642,171Analyst Report
Short Interest ↑
News Coverage
Regeneron Pharmaceuticals, Inc. stock logo
REGN
Regeneron Pharmaceuticals
$688.87
-0.4%
0.2913.75$75.41 billion800,892973,986Short Interest ↓
Flowers Foods, Inc. stock logo
FLO
Flowers Foods
$24.69
-1.6%
0.2924.45$5.32 billion1.06 million1.24 millionShort Interest ↓
AMN Healthcare Services, Inc. stock logo
AMN
AMN Healthcare Services
$105.96
-0.5%
0.2910.79$4.61 billion523,778552,570
B&G Foods, Inc. stock logo
BGS
B&G Foods
$16.49
-2.2%
0.2927.95$1.21 billion1.22 million1.05 million
Newmont Co. stock logo
NEM
Newmont
$42.03
+0.6%
0.2942.45$33.14 billion12.61 million9.52 millionShort Interest ↑
Analyst Revision
News Coverage
Genie Energy Ltd. stock logo
GNE
Genie Energy
$9.35
-0.5%
0.293.13$246.24 million41,09959,329News Coverage
Quipt Home Medical Corp. stock logo
QIPT
Quipt Home Medical
$4.17
+0.7%
0.3069.51$147.41 million13,28852,105Positive News
Gap Up
Immatics stock logo
IMTX
Immatics
$10.00
+2.7%
0.3020.83$612.73 million223,807279,730Short Interest ↑
Royalty Pharma plc stock logo
RPRX
Royalty Pharma
$40.18
-0.4%
0.3052.18$24.49 billion1.99 million1.89 millionInsider Selling
News Coverage
Playtika Holding Corp. stock logo
PLTK
Playtika
$9.39
-3.0%
0.3012.69$3.99 billion5.98 million3.50 million
Daqo New Energy Corp. stock logo
DQ
Daqo New Energy
$53.08
+6.3%
0.302.54$3.72 billion1.67 million1.37 millionShort Interest ↑
Epsilon Energy Ltd. stock logo
EPSN
Epsilon Energy
$6.32
+1.0%
0.305.91$143.83 million40,067100,290Short Interest ↑
News Coverage
Positive News
CZFS
Citizens Financial Services
$70.20
+1.0%
0.3010.10$275.95 million3,0131,253Short Interest ↑
Positive News
High Trading Volume
American States Water stock logo
AWR
American States Water
$77.95
-2.2%
0.3034.96$2.95 billion287,212220,979News Coverage
FTI Consulting, Inc. stock logo
FCN
FTI Consulting
$165.71
+0.4%
0.3027.08$5.70 billion350,845247,552
Whole Earth Brands, Inc. stock logo
FREE
Whole Earth Brands
$3.84
-4.2%
0.3114.77$168.31 million287,578309,099
Grifols, S.A. stock logo
GRFS
Grifols
$6.16
+3.5%
0.314.92$4.09 billion3.06 million1.28 millionGap Up
High Trading Volume
Jewett-Cameron Trading Company Ltd. stock logo
JCTCF
Jewett-Cameron Trading
$5.30
-1.0%
0.319.14$18.69 million3,4324,892Short Interest ↑
News Coverage
Positive News
Gilead Sciences, Inc. stock logo
GILD
Gilead Sciences
$61.69
-2.2%
0.3118.81$79.05 billion8.79 million8.10 million
ESSA Bancorp, Inc. stock logo
ESSA
ESSA Bancorp
$19.39
-0.6%
0.3110.48$202.49 million21,90624,046Short Interest ↑
Kimberly-Clark Co. stock logo
KMB
Kimberly-Clark
$112.54
-2.1%
0.3121.27$38.82 billion2.29 million1.48 million
Pinnacle West Capital Co. stock logo
PNW
Pinnacle West Capital
$64.51
-2.6%
0.3113.33$7.49 billion1.26 million647,908
Spire Inc. stock logo
SR
Spire
$62.33
-2.6%
0.3115.90$3.36 billion366,070243,816
FVCBankcorp, Inc. stock logo
FVCB
FVCBankcorp
$19.17
-1.0%
0.3211.69$270.47 million21,79823,584News Coverage
Positive News
BioMarin Pharmaceutical Inc. stock logo
BMRN
BioMarin Pharmaceutical
$84.77
-0.3%
0.32326.05$15.78 billion1.44 million912,510Analyst Report
News Coverage
Kentucky First Federal Bancorp stock logo
KFFB
Kentucky First Federal Bancorp
$7.20
0.3237.90$58.71 million7491,284Short Interest ↑

What Are Low Beta Stocks

Many retail investors assume that you can’t predict the stock market. And since you can’t predict it, they assume that investing in stocks carries a certain amount of risk. Well, as it turns out, there is a way to assess the risk of a particular security: it’s called beta. Low beta stocks are those securities that carry the lowest amount of risk.

How to Use Low Beta Stocks to Minimize Risk and Increase Returns

Beta is essentially a measure of a stock’s volatility. Risk level is one of the most important stats to analyze in terms of investing in stocks. A comparison of a stock’s risk factor to your own level of risk tolerance will help you know whether to buy, sell, or avoid a certain security. Beta is the number that will help you understand a stock’s level of risk and make those decisions.

What Is the Beta of a Stock?

In the simplest terms, beta is a tool that compares how volatile a stock is in comparison to the overall market. The stock market is the “control” and has a definitive benchmark beta of 1.0, while each individual security is the “variable,” with a beta that varies in terms of how much the stock moves around.

A stock that is more volatile than the market has a beta of more than 1.0, while a stock that is less volatile than the market has a beta of less than 1.0. If you’re a short-term trader riding the market waves and looking at stock market gainers, stock beta can let you know which securities might be the riskiest—then you can decide whether or not to get involved.

As you can see from this explanation, risky stocks are not the only ones that carry risk. Every one of the individual stocks can be viewed as a risky stock to some degree, even if the degree is negligible. Even in bull markets, when it seems like the sky’s the limit forever, it’s impossible for a stock to mirror the benchmark.

How to Calculate Beta

The beta of a stock is calculated using regression analysis. In short, regression analysis is all about comparing one stable variable with other changing variables. The formula for calculating a stock’s beta is simple in theory—beta is found by dividing covariance by variance.

Covariance represents how similar or dissimilar two numbers are in their movements—in this case, a stock is being compared to the market. Positive numbers indicate that their movement is similar. Negative numbers indicate that their movements are different.

Variance represents how much the “control” variable bounces around in comparison to its mean—its normal state. To keep it short and sweet, a stock’s beta is calculated with the intention of assessing how similar or divergent a stock’s movement is in comparison to the market—and thereby determining its volatility. Beta, in turn, can be worked into a complex equation to create a Capital Asset Pricing Model (CAPM). This equation helps calculate the expected return of an asset, using its risk-free rate as a starting point (a hypothetical rate of return involving no risk).

Beyond beta, other formulas, such as the Sharpe Ratio—which uses standard deviation—can help investors determine how much additional yield they’ll get for every increase per unit of risk. Then there is tracking error, which helps investors understand how much performance has deviated from the intended benchmark.

As you can see, beta is the gateway stat for an in-depth, computational way of growing equity through leveraging statistical opportunities in the stock market. 

Low Beta Strategy

Low Beta Strategy focuses on investing in securities that have a low beta. These are stocks issued by companies in a sector like consumer goods, food, and utilities. This type of asset tends to avoid wild fluctuations because its line of business is both necessary and consistent. For example, utility companies exert a relative monopoly over their local region and face little competition in their sector.

Low Beta stocks are safer in terms of price when the market is down—they match the market, and don’t wildly plummet while the market is coasting. However, when the market is up, the same logic applies: these stocks gain less than some of their more volatile counterparts.

Some investment strategies actually involving investing in both low and high beta stocks simultaneously. Stocks with a higher beta—which can experience greater price fluctuations—can present opportunities for big gains through short-term trading of these volatility stocks. To offset potential losses, the investor will also buy into stocks with a lower beta and hold onto them for longer periods of time. This statistical arbitrage strategy is referred to as the bet against beta.

How to Reduce Risk in Your Portfolio

Unfortunately, beta is not a catchall indicator that can prevent losing your earnings to risky investments. While beta is a mathematical measure of how volatile a stock is in comparison to the market, it says nothing about other factors, like how a company operates, its debt, or current events that can affect its operations—such as its potential in regard to future earnings.

For example, a company in a stable industry like utilities can be poorly run, on the brink of bankruptcy, and facing a cataclysmic shutdown due to a recent energy-related event—but because it’s historically moved in close tandem with the overall market, it’s beta is low. Doesn’t sound like a good investment, does it?

One way to reduce risk in your portfolio is to diversify your investments. In terms of stocks, this can mean diversifying your portfolio through a range of companies and industries. However, if you want to truly minimize risk, the majority of your portfolio should be invested in stable, established, non-speculative securities, and preferably ones that pay good dividends or offer opportunities for growth.

One of the easiest ways to avoid risk is to invest in mutual funds or ETFs. This type of fund pools money from a number of investors. With a larger amount of money to play with, mutual fund managers can spread it out over a broader range of securities than each individual investor would be able to buy on their own. You can also diversify risk by investing in different types of asset classes. Between stocks, bonds, commodities, real estate, and business ownership, there are a number of vehicles for producing cash flow. A capital asset like a paid-off rental property can even produce free cash flow, unencumbered by expenses (this is every investor’s golden egg).

If your money is diversified, when one of your investments takes a hit, you won’t have to lose all your eggs—you’ve placed them in different baskets. While much ink has been spilled about which type of asset can consistently outperform the others in terms of growth, everyone can agree that at different times one asset outperforms the others; they all carry a degree of historical volatility (even real estate). 

If you do want to pick out which stock comprises your portfolio, another strategy for reducing risk is to invest in established, stable companies—but these companies are stable beyond their beta score. Large blue-chip companies, like those you’ll find in Warren Buffet’s portfolio, have been around for decades. They are well run, well-financed, and have low amounts of debt. Beta says nothing about the degree of competence with which a company is run, although competently-run, long-standing companies usually do have a lower beta score.

Even if you’re trying to avoid too much risk, most financiers would agree that it’s okay to take a small percentage of your portfolio (financial experts such as Benjamin Graham have suggested no more than 5%) and look at cheap stocks to buy. These stocks might be riskier, but they can also provide good returns if they work out. If they don’t, your losses will be marginal.

Is It Smart to Invest in Low Beta Stocks?

While beta is used to analyze risk, it does have some shortcomings. As mentioned, beta is a comparative statistic that says nothing about how a company is run. It’s been described by analysts as a sort of rearview mirror, reflecting what’s behind, but not necessarily what’s ahead (which, by contrast, is very impacted by the degree of managerial competence and current events).

That said, beta can be a good tool for short-game investors looking to minimize risk. For long-term investors, it’s not necessarily that useful.

Moreover, beta is a number that says nothing about a stock’s price movement in terms of whether it’s going up or down. All beta tells you is a stock’s volatility relative to the market. This is especially problematic in light of the fact that investors, especially short-term traders, make their moves based on stock prices. However, in conjunction with other stats that give a more complete picture of a stock and its performance, beta can be a useful tool for assessing a security’s level of risk—for short term investors. Long-term investors will want to get a more complete picture of a company, how it’s run, and its level of debt before making an investment.

Investors should not just look at a stock’s beta, but also examine their own level of risk tolerance. Younger investors building a retirement portfolio can afford to take on more risks. After all, they have decades of investment ahead of them. Older investors nearing retirement want to avoid risk and do what they can to stabilize their portfolio as much as possible since it will become a source of income.

There are many strategies for investing in stocks, and they all depend on the investor's preferred mode of gain. A dividend investing strategy can turn rivulets of pennies into a mighty dividend stream, which is great for investors who want passive income. Day trading is great for investors who are skilled enough to leverage swings in the most volatile stocks at the drop of a hat. Other investors might find themselves somewhere between the long game and the short game, figuring out the best growth stocks to scoop up and sell at a profit weeks or months later.

Institutional investors may make a beta calculation as part of their equity and growth strategy, but it’s not the only tool they leverage for assessing how to respond to systematic risk. They do an in-depth micro and macro analysis of stats like market capitalization and general market volatility. Investors also perform fundamental and financial analysis of a company to consider future growth and dividend yield.

Low Beta Stocks

Beta tells you how risky a stock is by comparing its activity to that of the market. It’s important to combine financial signifiers like beta and even professional analyst ratings with fundamental analysis of a company. Alternatively, you can turn over investment decisions to a money manager.

Assessing the balance between risk and reward as it relates to financial gain is the bread and butter of short-term trading. But if short-term trading is not for you, you may consider other strategies such as searching for dividend-paying stocks, the snowballing equity of which can be rolled back into more dividend stocks. Retail investors can also piggyback invest by mimicking the portfolio of established investors with a track record of success. These strategies can be a much easier way for the average investor to increase their stock market earnings than attempting to leverage stock market beta. However, if you are looking to leverage short positions through day trading or similarly short-term asset growth, beta can be a useful tool for determining the risk of a particular security.


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