The VIX index, also known as the “fear gauge,” measures the implied volatility of S&P 500 index options, and it increases when market uncertainty takes over. If a stock has a high historical correlation with the VIX, it has tended to perform well during times of volatility and uncertainty.
But of course, past performance is no guarantee of future results.
We ran a screen on low-debt companies with high growth in cash flow, comparing trailing-twelve-month operating cash flow/common equity to the five-year average. We screened these stocks for those with high correlation to the VIX index over the last three months.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
Click to enlarge
Do you think these stocks would weather a stock market storm well? Use this list as a starting point for your own analysis.
List sorted by correlation to VIX.
1. Yamana Gold, Inc. (AUY): Gold Industry. Market cap of $11.09B. TTM operating cash flow/common equity at 0.10 vs. five-year average at 0.07. MRQ total debt to assets at 0.04. Correlation to the VIX index at 0.53. Exhibiting strong upside momentum - currently trading 9.11% above its SMA20, 17.05% above its SMA50, and 20.17% above its SMA200. The stock has had a couple of great days, gaining 7.99% over the last week.
2. AuRico Gold Inc. Ordinary Share (AUQ): Gold Industry. Market cap of $2.21B. TTM operating cash flow/common equity at 0.16 vs. five-year average at 0.06. MRQ total debt to assets at 0.04. Correlation to the VIX index at 0.38. The stock has gained 111.94% over the last year.
3. Aaron's, Inc. (AAN): Rental and Leasing Services Industry. Market cap of $1.83B. TTM operating cash flow/common equity at 0.26 vs. five-year average at 0.14. MRQ total debt to assets at 0.03. Correlation to the VIX index at 0.29. It has been a rough couple of days for the stock, losing 6.66% over the last week.
*Price data sourced from Yahoo! Finance, operating cash flow/common equity and total debt to assets data sourced from Screener.co, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.