Boring beats spectacular: low-volatility stocks historically delivered more risk-adjusted return. This screen finds them automatically.
Save the strategy and StockScorer checks its rules for you every day. You'll get a heads-up whenever a stock crosses the upper or lower score threshold.
Once enough history is available, the backtest chart for this strategy will appear here.
Every stock runs through the same disclosed rules. The points add up to a score, traceable down to the individual rule.
Each rule checks a metric against a threshold, for example ROE above 15 %.
You decide how much each rule counts: from +1 to +3 or −1 to −3.
The sum is the score. Above the upper threshold: a high match with the profile.
These terms describe only the match with the criteria, not a recommendation to buy or sell.
Beta measures market sensitivity: below 0.8 clearly defensive (+2), above 1.3 highly volatile (−2).
An equity ratio above 40% provides the buffer defensive investors look for.
A dividend uncut for at least five years demonstrates plannable cash flows.
Return on equity above 10% with positive earnings; a loss year costs a point.
For safety-oriented investors, retirees and anyone who copes badly with deep drawdowns. The strategy deliberately trades upside for stability: in strong bull markets it typically lags the market.
The low-volatility anomaly is one of the best-documented capital-market observations: stocks with low price swings delivered higher risk-adjusted returns over decades than highly volatile names, the opposite of what classic theory (more risk = more return) would predict. A common explanation: investors systematically overpay for lottery-like stocks with spectacular upside and shun the boring. This strategy turns that around: a beta below 0.8 is the core criterion, flanked by a defensive equity ratio, a dividend uncut for years and stable profitability.
Beta is the core: below 0.8 (the stock follows market moves only in dampened form) earns +2 points, 0.8 to 1.0 still +1. A beta above 1.3 or a missing value costs 2 points: without demonstrable low volatility, a stock is by definition not a candidate here.
Three defensive checks complete the picture: equity ratio above 40% (+1), dividend uncut for at least five years (+1) and stable profitability: return on equity above 10% with positive net income (+1); a loss year costs a point. The upper threshold is 3 points (small caps: 4); a low beta alone is not enough, at least one quality signal must come on top.
Beta < 0.8: clearly less volatile than the market (+2). Beta 0.8–1.0: moderately defensive (+1). Beta > 1.3 or missing: highly volatile (−2).
Equity ratio > 40%: defensive balance sheet (+1).
Dividend uncut for ≥ 5 years: reliable payout (+1).
ROE > 10% with positive earnings: stable profitability (+1). Net income negative: loss year (−1).
The strength lies in drawdown behaviour: defensive portfolios typically lose considerably less in corrections and have less to recover afterwards. That is the mathematical source of the anomaly: losing 20% requires a 25% recovery; losing 40% requires 67%.
Limits: in strong bull markets the strategy lags, that is not a flaw but the price of stability. Beta is also a backward-looking metric; structural changes in a business model show up in it only with delay. In the backtest the beta and dividend-streak rules are only partially scoreable depending on historical data availability; the rule-coverage panel discloses this transparently.
For investors who care more about maximum drawdown than the last percent of return, as the defensive core of a portfolio or as a calming complement to aggressive strategies.