Do you worry about stock market volatility? One idea is to consider a stock's historical correlation to volatility, as measured by the volatility index VIX.
Stocks with strong positive correlations to VIX have historically tended to perform well when volatility, or market uncertainty, increases. These stocks may have been treated as 'safe havens.'
We ran a screen on the tech sector for high-growth stocks, with 5-year projected EPS growth above 20%. We then screened for those with high positive correlation to VIX over the last two 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 these stocks will benefit from more volatility in the future? Use this list as a starting point for your own analysis.
1. China Unicom (Hong Kong) Limited (NYSE:CHU): Engages in the provision of GSM and WCDMA cellular, and related telecommunications services in the People's Republic of China. 5-year projected EPS growth at 48.10%. Correlation with the VIX index at 0.743 over the last 60 days.
2. Demand Media, Inc. (DMD): Operates as a content and social media company in the United States. 5-year projected EPS growth at 21.77%. Correlation with the VIX index at 0.553 over the last 60 days.
3. Internet Initiative Japan Inc. (NASDAQ:IIJI): Provides Internet connectivity, outsourcing, and systems integration services to customers primarily in Japan. 5-year projected EPS growth at 31.10%. Correlation with the VIX index at 0.676 over the last 60 days.
4. Konami Corp. (NYSE:KNM): Develops, publishes, markets, and distributes video game software products for stationary and portable consoles, as well as for use on personal computers. 5-year projected EPS growth at 32.10%. Correlation with the VIX index at 0.656 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.