If you think that market volatility is going to persist in the near future, one way to invest with the idea is by using the volatility index VIX.
The VIX index (or “fear gauge”) measures the implied volatility of S&P 500 index options, and it increases when market uncertainty takes over. If a stock has positive historical correlation with the VIX, it has tended to perform well when volatility and uncertainty spike. The market may be treating these stocks as “safe havens” during market crises.
We ran a screen on stocks from the healthcare sector for those with strongly positive correlations to VIX 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.
Do you think the market is treating these stocks as safe havens? Use this list as a starting-off point for your own analysis, and remember that past performance is no guarantee of future returns.
List sorted by correlation to VIX.
1. Allied Healthcare International Inc. (AHCI): Provides flexible or temporary healthcare staffing services to the healthcare and social care industries in the United Kingdom. Market cap of $167.31M. Correlation to the VIX index at 0.86. The stock has gained 64.81% over the last year.
2. Kensey Nash Corporation (KNSY): Engages in the field of regenerative medicine utilizing its proprietary collagen and synthetic polymer technology to help repair damaged or diseased tissues. Market cap of $226.80M. Correlation to the VIX index at 0.67. The stock is a short squeeze candidate, with a short float at 14.53% (equivalent to 19.52 days of average volume). The stock has lost 9.42% over the last year.
3. RTI Biologics, Inc. (RTIX): Produces orthopedic and other surgical implants that repair and promote the natural healing of human bone and other human tissues, and improve surgical outcomes. Market cap of $190.30M. Correlation to the VIX index at 0.64. The stock has had a couple of great days, gaining 11.65% over the last week.
4. Akorn, Inc. (AKRX): Engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. Market cap of $869.74M. Correlation to the VIX index at 0.64. The stock is a short squeeze candidate, with a short float at 8.38% (equivalent to 5.67 days of average volume). Exhibiting strong upside momentum--currently trading 13.61% above its SMA20, 19.55% above its SMA50, and 43.05% above its SMA200. The stock has had a couple of great days, gaining 15.74% over the last week.
*Price data sourced from Yahoo! Finance, 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.