The return to volatility was an important theme for stock investors during 2018, as complacency and short memories set the stage for panic, especially during the fourth quarter. But as we saw on Jan. 28, daily volatility can still change investors’ perceptions on a dime. To break away from the daily noise, investors may find it useful to identify which stocks have shown the greatest price volatility and which have been least volatile.
Bad timing
As an example, semiconductors are normally a volatile group of stocks. They have greatly outperformed the broad market over the past five years, but the daily grind, especially during periods of higher overall volatility for the market, is not for everyone.
We published an article headlined “Semiconductor stocks are hot — here are the winners, losers and analyst favorites.” The headline was correct through Jan. 25, because the PHLX Semiconductor Index ETF SOXX, -1.41% was up 11% year-to-date, following a 15% beating during the fourth quarter. Then shares of Nvidia NVDA, -4.62% sank 14% on Jan. 28 after the company reduced its fourth-quarter revenue outlook to $2.2 billion from $2.7 billion. That changed the mood for the semiconductor subsector — at least for the day.
A low-volatility advantage
It turns out that for buy-and-hold index-fund investors, a strategy of investing only in the least volatile 100 stocks among the S&P 500 Index SPX, -0.09% S&P 400 Mid Cap Index MID, +0.21% and S&P 600 Small Cap Index SML, +0.17% has outperformed the broad indexes over various periods.
For stock pickers, holding the most volatile names can be very difficult if they are day traders or short-term investors. Returns for stocks showing the greatest recent volatility have been mixed, but there is a clear tendency for the least volatile to outperform over long periods.
Read: When stock markets turned turbulent, ESG funds punched above their weight
Most volatile stocks
Using data provided by FactSet, we pulled daily and monthly price volatility standard deviation for the S&P 500 and then looked at different time periods:
Here are the 10 most volatile S&P 500 stocks on a daily basis so far in 2019:
| Daily price volatility | Total return | |||||||
| Company | Ticker | Industry | 2019 through Jan. 28 | Q4, 2018 | 2018 | 2019 | Q4, 2018 | 2018 |
| Advanced Micro Devices Inc. | AMD, -4.31% | Semiconductors | 5.17 | 5.43 | 3.97 | 9% | -40% | 80% |
| Celgene Corp. | CELG, +0.78% | Biotechnology | 4.90 | 2.29 | 1.90 | 36% | -28% | -39% |
| ResMed Inc. | RMD, +0.35% | Medical Specialties | 4.85 | 1.84 | 1.65 | -20% | -1% | 36% |
| Arconic Inc. | ARNC, +1.26% | Aluminum | 4.83 | 2.39 | 2.53 | 8% | -23% | -37% |
| Macy's Inc. | M, -0.04% | Department Stores | 4.78 | 2.71 | 2.62 | -14% | -13% | 24% |
| Nvidia Corp. | NVDA, -4.62% | Semiconductors | 4.71 | 4.71 | 3.09 | 3% | -52% | -31% |
| Xilinx Inc. | XLNX, +0.46% | Semiconductors | 4.66 | 3.27 | 2.31 | 28% | 7% | 29% |
| Freeport-McMoRan Inc. | FCX, +2.29% | Precious Metals | 4.57 | 3.01 | 2.76 | 0% | -26% | -45% |
| Nektar Therapeutics | NKTR, -1.72% | Biotechnology | 4.54 | 4.20 | 4.81 | 31% | -46% | -45% |
| Lam Research Corp. | LRCX, -0.32% | Electronic Production Equipment | 4.50 | 2.59 | 2.52 | 22% | -10% | -24% |
| S&P 500 Index | SPX, -0.09% | 1.19 | 1.48 | 1.07 | 6% | -14% | -4% | |
| Source: FactSet | ||||||||
As you can see, the high levels of daily price volatility haven’t necessarily been correlated with bad performance this month. However, eight out of these 10 stocks suffered double-digit declines during the fourth quarter and six did so for all of 2018.
Then again, this group sports some long-term winners. For the same group of S&P 500 stocks showing the greatest daily price volatility so far this year, this table shows standard deviation of monthly price volatility and total returns for three, five and 10 years through Jan. 28:
| Monthly price volatility | Total return | ||||||
| Company | Ticker | 3 years | 5 years | 10 years | 3 Years | 5 Years | 10 Years |
| Advanced Micro Devices Inc. | AMD, -4.31% | 19.50 | 17.32 | 17.64 | 870% | 470% | 759% |
| Celgene Corp. | CELG, +0.78% | 9.42 | 9.06 | 8.67 | -10% | 9% | 234% |
| ResMed Inc. | RMD, +0.35% | 5.63 | 6.27 | 6.38 | 72% | 128% | 401% |
| Arconic Inc. | ARNC, +1.26% | 13.13 | 13.13 | 13.13 | N/A | N/A | N/A |
| Macy's Inc. | M, -0.04% | 10.69 | 9.60 | 10.53 | -25% | -43% | 236% |
| Nvidia Corp. | NVDA, -4.62% | 14.13 | 11.93 | 12.83 | 400% | 830% | 1,598% |
| Xilinx Inc. | XLNX, +0.46% | 6.34 | 6.64 | 6.71 | 144% | 166% | 699% |
| Freeport-McMoRan Inc. | FCX, +2.29% | 20.29 | 18.97 | 16.11 | 136% | -66% | -7% |
| Nektar Therapeutics | NKTR, -1.72% | 29.80 | 24.84 | 20.15 | 214% | 222% | 904% |
| Lam Research Corp. | LRCX, -0.32% | 8.35 | 7.84 | 8.40 | 151% | 248% | 646% |
| S&P 500 Index | SPX, -0.09% | 3.15 | 3.15 | 3.93 | 48% | 64% | 274% |
| Source: FactSet | |||||||
Its fascinating to see that the majority of these stocks have beaten the returns for the S&P 500 SPX, -0.09% over long periods, despite all the pain they may have caused over recent periods.
Here are the most volatile stocks among the S&P 500 over the past three years, based on standard deviations of monthly price movement:
| Monthly price volatility | Total return | |||||||
| Company | Ticker | Industry | 3 years | 5 years | 10 years | 3 Years | 5 Years | 10 Years |
| Nektar Therapeutics | NKTR, -1.72% | Biotechnology | 29.80 | 24.84 | 20.15 | 214% | 222% | 904% |
| Freeport-McMoRan Inc. | FCX, +2.29% | Precious Metals | 20.29 | 18.97 | 16.11 | 136% | -66% | -7% |
| Advanced Micro Devices Inc. | AMD, -4.31% | Semiconductors | 19.50 | 17.32 | 17.64 | 870% | 470% | 759% |
| Marathon Oil Corp. | MRQ, +0.00% | Oil & Gas Production | 14.89 | 13.78 | 11.21 | 80% | -48% | 11% |
| Devon Energy Corp. | DVN, +1.42% | Oil & Gas Production | 14.46 | 12.94 | 11.10 | 2% | -52% | -54% |
| Twitter Inc. | TWTR, -4.90% | Internet Software/ Services | 14.27 | 14.03 | 15.51 | 101% | -45% | N/A |
| Nvidia Corp. | NVDA, -4.62% | Semiconductors | 14.13 | 11.93 | 12.83 | 400% | 830% | 1,598% |
| Seagate Technology PLC | STX, -0.86% | Computer Peripherals | 13.55 | 11.85 | 14.24 | 97% | 11% | 1,533% |
| Arconic Inc. | ARNC, +1.26% | Aluminum | 13.13 | 13.13 | 13.13 | N/A | N/A | N/A |
| Capri Holdings Ltd. | CPRI, +0.42% | Apparel/ Footwear Retail | 12.82 | 11.43 | 11.59 | 10% | -48% | N/A |
| S&P 500 Index | SPX, -0.09% | 3.15 | 3.15 | 3.93 | 48% | 64% | 274% | |
| Source: FactSet | ||||||||
This time the results of the higher-volatility group have been mixed.
Least volatile stocks
Here are the 10 least volatile S&P 500 stocks on a daily basis so far in 2019:
| Daily price volatility | Total return | |||||||
| Company | Ticker | Industry | 2019 through Jan. 28 | Q4, 2018 | 2018 | 2019 | Q4, 2018 | 2018 |
| Red Hat Inc. | RHT, +0.00% | Software | 0.42 | 5.86 | 3.39 | 0% | 29% | 46% |
| Twenty-First Century Fox Inc. Class A | FOXA, -0.20% | Movies/ Entertainment | 0.52 | 0.90 | 1.33 | 2% | 4% | 41% |
| American Tower Corp. | AMT, +0.49% | Real Estate Investment Trusts | 0.64 | 1.57 | 1.28 | 6% | 9% | 13% |
| Walmart Inc. | WMT, -0.29% | Specialty Stores | 0.72 | 1.49 | 1.51 | 4% | 0% | -3% |
| Evergy Inc. | EVRG, -0.20% | Electric Utilities | 0.73 | 1.06 | 1.10 | 0% | 4% | 11% |
| Iron Mountain Inc. | IRM, +0.47% | Real Estate Investment Trusts | 0.74 | 1.93 | 1.52 | 12% | -4% | -8% |
| Sysco Corp. | SYY, -0.55% | Food Distributors | 0.75 | 1.66 | 1.36 | 0% | -14% | 5% |
| Colgate-Palmolive Co. | CL, +1.23% | Household/ Personal Care | 0.82 | 1.77 | 1.30 | 6% | -11% | -19% |
| Western Union Co. | WU, -1.16% | Finance/ Rental/ Leasing | 0.83 | 1.31 | 1.33 | 7% | -10% | -7% |
| SBA Communications Corp. Class A | SBAC, +0.14% | Real Estate Investment Trusts | 0.84 | 1.61 | 1.37 | 10% | 1% | -1% |
| S&P 500 Index | SPX, -0.09% | 1.19 | 1.48 | 1.07 | 6% | -14% | -4% | |
| Source: FactSet | ||||||||
Most of these stocks have underperformed the index. But all but one outperformed during the fourth quarter. For all of 2018, seven out of 10 outperformed the index.
Staying with the same group of S&P 500 stocks, here are long-term monthly price volatility and return figures through Jan. 28:
| Monthly price volatility | Total returns | ||||||
| Company | Ticker | 3 years | 5 years | 10 years | 3 Years | 5 Years | 10 Years |
| Red Hat Inc. | RHT, +0.00% | 8.49 | 7.68 | 8.71 | 161% | 208% | 1050% |
| Twenty-First Century Fox Inc. Class A | FOXA, -0.20% | 8.13 | 8.17 | 8.64 | 95% | 66% | 721% |
| American Tower Corp. | AMT, +0.49% | 5.07 | 5.00 | 4.81 | 93% | 130% | 498% |
| Walmart Inc. | WMT, -0.29% | 5.39 | 5.39 | 5.06 | 63% | 48% | 156% |
| Evergy Inc. | EVRG, -0.20% | 4.57 | 4.82 | 4.58 | 47% | 106% | 323% |
| Iron Mountain Inc. | IRM, +0.47% | 6.28 | 6.84 | 7.94 | 68% | 100% | 212% |
| Sysco Corp. | SYY, -0.55% | 4.84 | 4.29 | 4.44 | 70% | 100% | 258% |
| Colgate-Palmolive Co. | CL, +1.23% | 4.85 | 4.36 | 4.17 | 3% | 12% | 149% |
| Western Union Co. | WU, -1.16% | 4.40 | 5.36 | 7.46 | 18% | 35% | 57% |
| SBA Communications Corp. Class A | SBAC, +0.14% | 6.04 | 6.20 | 6.05 | 87% | 98% | 749% |
| S&P 500 Index | SPX, -0.09% | 3.15 | 3.15 | 3.93 | 48% | 64% | 274% |
| Source: FactSet | |||||||
This time the tendency toward long-term outperformance is clear.
So now let’s look only at the long-term monthly price volatility to see which stocks have shown the least price movement over the past three years:
| Monthly price volatility | Total return | |||||||
| Company | Industry | Ticker | 3 years | 5 years | 10 years | 3 Years | 5 Years | 10 Years |
| Republic Services Inc. | Environmental Services | RSG, +0.28% | 3.05 | 3.14 | 5.14 | 89% | 166% | 274% |
| Loews Corp. | Property/ Casualty Insurance | L, +0.13% | 3.41 | 3.66 | 5.18 | 35% | 9% | 94% |
| Coca-Cola Co. | Beverages: Non-Alcoholic | KO, +0.19% | 3.47 | 3.88 | 4.11 | 22% | 43% | 193% |
| Waste Management Inc. | Environmental Services | WM, +0.15% | 3.50 | 3.89 | 4.48 | 95% | 160% | 300% |
| Aflac Inc. | Life/ Health Insurance | AFL, -0.16% | 3.63 | 4.10 | 9.75 | 74% | 71% | 389% |
| Air Products and Chemicals Inc. | Chemicals | APD, +2.01% | 3.69 | 4.53 | 5.84 | 57% | 82% | 301% |
| Berkshire Hathaway Inc. Class B | Multi-Line Insurance | BRK.B, +0.29% | 3.80 | 3.92 | 4.58 | 59% | 79% | 236% |
| Ecolab Inc. | Chemicals | ECL, +0.06% | 3.83 | 4.05 | 4.65 | 54% | 64% | 397% |
| Fiserv Inc. | Data Processing Services | FISV, -2.02% | 3.90 | 3.93 | 4.73 | 87% | 200% | 922% |
| Procter & Gamble Co. | Household/ Personal Care | PG, -0.01% | 4.00 | 4.01 | 4.20 | 29% | 39% | 121% |
| S&P 500 Index | SPX | 3.15 | 3.15 | 3.94 | 48% | 64% | 274% | |
| Source: FactSet | ||||||||
Again, there is a clear correlation between low volatility over long periods and outperformance.
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