Russell 1,000 Stocks With the Highest and Lowest Betas

Hickey and Walters (Bespoke) submit: When investors feel very strongly about the future direction of the market, they might look for high beta stocks to buy or sell. Beta measures the volatility of a security compared to the market as a whole (often times the S&P 500).

For those not familiar with the term, a stock with a beta of 1 moves directly inline with the S&P 500. A stock with a beta less than 1 is less volatile than the market, and a stock with a beta greater than 1 is more volatile than the market. Since high beta stocks are more volatile than the market, investors might buy them in hopes of receiving higher returns if they think the market is due to go higher. Investors that think the market is due for a correction might short high beta stocks or stick with low beta stocks that are less correlated with the market as a whole.

Below we list the 20 stocks in the Russell 1,000 that have the highest and lowest betas (compared to the S&P 500). AK Steel (AKS) is a high beta stock that is up 127.8% year to date, while homebuilders RYL, KBH and DHI also have high betas but are down significantly.

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Comments

[bersig:]

Stating the beta without giving any correlation factor is not terribly useful. What's the volatility of each of those stocks? How closely does any given stock on that list track the index? If you just went by beta alone you might very well invest in something like DHI that zigged when the market zagged, or worse, missed out on something like WFR.

2007 Jul 15 10:04 PM