The market has become extremely volatile with investors’ concern about the new wave of coronavirus infections overshadowing the Federal Reserve’s commitment of supporting the economy.

Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities can not only deliver healthy returns but also provide a shield against market volatility.

Meaning of Beta

Beta measures the volatility or risk of a particular asset in comparison to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.

If a stock has a beta of 1, then the price of the stock will move with the market. So, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.

For example, if the market offers a return of 20%, a stock with beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.

Screening Criteria:

We have taken beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters as well that can add value to the portfolio.

Percentage Change in Price in the Last 4 Weeks greater than zero: This ensures that the stocks saw positive price movement over the last month.

Average 20 Day Volume greater than 50,000: A substantial trading volume ensures that the stocks are easily tradable.

Price greater than or equal to $5: They must all be trading at a minimum of $5 or higher.

Zacks Rank equal to 1: Zacks Rank #1 (Strong Buy) stocks indicate that they will significantly outperform the broader U.S. equity market over the next one to three months.

Here are five of the nine stocks that qualified the screening:

Being a leading operator of oil tankers, Frontline Ltd. (FRO - Free Report) — based in Hamilton, Bermuda — is involved in transporting crude and petroleum products across the globe. The stock is likely to see earnings growth of 184.2% in 2020.

iClick Interactive Asia Group Limited (ICLK - Free Report) — headquartered in Quarry Bay, Hong Kong — is primarily involved in providing online marketing services. The stock is likely to see earnings growth of 150% in 2020.

For treating patients with acute pain, Avenue Therapeutics, Inc. (ATXI - Free Report) — headquartered in New York — in engaged in developing IV tramadol. The company is likely to see bottom-line growth of 64.2% in 2020.

To treat genetic disorders, ProQR Therapeutics N V (PRQR - Free Report) is primarily involved in developing RNA-based therapeutics. The stock is likely to see a 10.3% bottom-line growth in 2020.

BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report): BJ’s Wholesale is an operator of membership warehouse clubs, primarily in the U.S. East Coast. Sporting a VGM Score of A, this Westborough, MA-headquartered company’s expected EPS growth rate for the next five years is 13.5%, which compares favorably with the industry's 10.9%.