Do you worry about stock market volatility when choosing among companies? One idea is to consider their correlation with volatility. With this idea in mind, we ran a screen.
We began by screening the biotech industry for stocks with high growth projections, with 5-year projected EPS growth rates above 15%.
We then screened for those with strong positive correlations to the volatility (VIX) index over the last two months. This indicates that these stocks have tended to outperform when market uncertainty and volatility spiked. This may bode well if the market sees more volatility in the future. Of course, past performance is no guarantee of future returns.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall.
Do you think volatility is in the market's future? Use this list as a starting point for your own analysis.
List sorted by correlation with the VIX index over the last 60 days.
1. Arena Pharmaceuticals, Inc. (ARNA): Focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Market cap at $1.14B, most recent closing price at $6.27. 5-year projected EPS growth at 25.00%. Correlation with the VIX index at 0.789 over the last 60 days.
2. Xenoport, Inc. (XNPT): Focuses on developing and commercializing internally discovered product candidates that utilize the body's natural nutrient transport mechanisms to enhance the therapeutic benefits of drugs. Market cap at $219.32M, most recent closing price at $6.14. 5-year projected EPS growth at 25.00%. Correlation with the VIX index at 0.747 over the last 60 days.
3. Amylin Pharmaceuticals, Inc. (AMLN): Engages in the discovery, development, and commercialization of drug candidates for the treatment of diabetes, obesity, and other diseases. Market cap at $4.45B, most recent closing price at $27.35. 5-year projected EPS growth at 63.60%. Correlation with the VIX index at 0.599 over the last 60 days.
*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.