Stock Quote featured expert Kevin Matras highlights: Buckle, Hawaiian Electric Industries and Syngenta

Kevin Matras looks at how to minimize your portfolios market risk and volatility by using the beta measure. Stocks in this weeks article are Buckle, Inc. (NYSE: BKE), Hawaiian Electric Industries, Inc. (NYSE: HE) and Syngenta AG (NYSE: SYT). Click here for the full story exclusively on

Screen of the Week written by Kevin Matras of Zacks Investment Research:

This week I want to talk about beta.

As investors try and protect themselves from market risk and volatility, a quick look at your stocks beta could help determine your co-movement measure.

First and foremost, beta is a measure of an assets risk relative to the market (usually the S&P 500). (Its typically calculated as the performance a stock has experienced in the last five years as the S&P has moved up and down.) A beta of 1 means the stocks relative volatility is equal to that of the market. Therefore, a beta thats greater than 1 is more volatile than the market and a beta of less than 1 is less volatile. (It can also be explained as its excess movement or return.)

For instance, a beta of 1.5, will have 1 1/2 times the markets movement (50% more movement than the market). But if the market is plummeting, more than likely youre dropping even more than the market.

Take the following statistics for example. I ran four tests on the Research Wizard; one for stocks with betas half as much as the market and one with betas 50% more than the market. The results give a great illustration of beta or co-movement (a.k.a. covariance).

Over the last four weeks, the S&P 500s percentage price change was down by approximately 5.44%. However, by focusing on stocks with betas of less than .5 (half the markets volatility) the average four-week percentage price change was only down 2.81%, meaning these low beta stocks virtually cut the losses by nearly half as much as the market.

This is in contrast to stocks that had betas of one and a half times the market (50% more market risk/volatility). The average four-week percentage price change on those stocks was down 9.08%. Thats a whopping 67% more downside risk than the market during that time.

(Both tests were applied to stocks with prices greater than or equal to $5 and average daily share volume of greater than or equal to 50,000.)

Of course, beta alone isnt a magic item, but used in conjunction with other proven stock-picking techniques can help you minimize unnecessary market risk and volatility.

Heres a screen Im currently using to scan for good stocks with half the markets volatility:

Zacks Rank equals 1

Beta less than .5 (half the volatility of the S&P 500)

Price greater than or equal to 5

Avg. 20-day Volume greater than or equal to 50,000

Currently, there are 25 stocks on this list. Here are three that look ready to breakout:

BKE Buckle, Inc.

HE Hawaiian Electric Industries, Inc.

SYT Syngenta AG

Start using the beta indicator in some of your own screens and see if it doesnt help you smooth out your portfolios volatility. Then test it all with our backtesting feature. You can do it.

Sign up now for your free trial to the Research Wizard and pick and choose from some of our proven, profitable strategies. Or put your own ideas to the test and start making better decisions today:

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Jim Giaquinto

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