@Team212 - what is your criteria for low volatility stocks
Haha. What do you mean? NFLX is only down about 70% in four months – if that’s not low volatility, I don’t know what is!
When selecting the list, we consider many indicators, and the two main ones are BETA and Market cap. Recent price movement trends do not necessarily correspond with the historical movement of the instruments.
Volatility is the variance of returns. If the stock goes down 5% per day every day, it is very consistent and hence low volatility
Are you talking about BABA (losing 71% since its all time highs, October/2020)?
It’s a difficult one but I suspect the parameters are wrong, or the list of stocks are dated. Hence the question which I think is valid given these are the list of stocks posted as low volatility stocks to customers.
Picking the first stock on the list, the volatility has been 40% between the high/low market prices for the past year, and that’s not just taking prices from the last week/month from either end.
Perhaps that is the measure, consistent (predictable?) performance considered as being low volatility. BABA price since Oct 2020 as @RLX put it, almost follows a straight line:
That is literally what volatility measures. Low volatility means low deviation from the mean, even if the mean is negative.
Doesn’t change the fact that T212’s lists aren’t the most accurate, tend to be heavily biased, not very up to date, and a little obscure in their selection method.
Edit: oh wait, you use Beta as an indicator of volatility? Now that makes sense
Pro tips: while a high Beta does suggest high volatility, a low Beta says nothing about the volatility of an asset.
I agree.
Imagine a Beta of a volatile index. A high beta of a volatile index, show that stock is also volatile. But the Beta is more a indicator of correlation between a asset or a basket of assets (portfolio/fund) and its benchmark, it’s not a volatility indicator.