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 exhibiting the Golden Cross technical momentum sign (in which the 50-day moving average crosses above the 200-day MA) 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 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. WNS (Holdings) Ltd. (WNS): Provides offshore business process outsourcing (BPO) services. Market cap of $524.39M. SMA50 at $10.37 vs. SMA200 at $10.22 (current price at $11.75). Correlation to the VIX index at 0.71. Exhibiting strong upside momentum--currently trading 9.83% above its SMA20, 13.34% above its SMA50, and 14.95% above its SMA200. The stock has had a couple of great days, gaining 7.27% over the last week.
2. OceanFreight, Inc. (OCNF): Provides shipping transportation services. Market cap of $104.96M. SMA50 at $14.66 vs. SMA200 at $13.27 (current price at $17.70). Correlation to the VIX index at 0.70. This is a risky stock that is significantly more volatile than the overall market (beta = 2.1). The stock has had a good month, gaining 16.82%.
3. Compania de Minas Buenaventura SA (BVN): Engages in the exploration, mining, processing, and development of gold, silver, and other metals in Peru. Market cap of $11.11B. SMA50 at $43.57 vs. SMA200 at $42.35 (current price at $40.32). Correlation to the VIX index at 0.61. It's been a rough couple of days for the stock, losing 10.96% over the last week.
4. Jaguar Mining Inc. (JAG): Engages in the production of gold, as well as in the acquisition, exploration, development, and operation of gold mineral properties in Brazil. Market cap of $472.70M. SMA50 at $5.71 vs. SMA200 at $5.53 (current price at $5.24). Correlation to the VIX index at 0.54. The stock is a short squeeze candidate, with a short float at 15.23% (equivalent to 7.41 days of average volume). The stock is currently stuck in a downtrend, trading 16.12% below its SMA20, 8.21% below its SMA50, and 5.29% below its SMA200. It's been a rough couple of days for the stock, losing 10.4% over the last week.
5. Rex Energy Corporation (REXX): Operates as an independent oil and gas company in the Appalachian, Illinois, and Denver-Julesburg Basins. Market cap of $590.92M. SMA50 at $12.21 vs. SMA200 at $11.93 (current price at $13.86). Correlation to the VIX index at 0.52. This is a risky stock that is significantly more volatile than the overall market (beta = 2.41). The stock is a short squeeze candidate, with a short float at 33.67% (equivalent to 12.1 days of average volume). Exhibiting strong upside momentum--currently trading 5.5% above its SMA20, 13.56% above its SMA50, and 16.19% above its SMA200. The stock has had a good month, gaining 19.71%.
*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.