Uncertainties are prevailing in the broader market, with investors concerned about the extent of the Federal Reserve's aggressive measures to raise interest rates to combat inflation. This is because excessive tightening of the financial conditions will take a toll on economic growth. These factors are making the market extremely volatile.

Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions. In this regard, stocks like Chesapeake Energy Corporation CHK, Renewable Energy Group, Inc. REGI and Pangaea Logistics Solutions Ltd. PANL are worth betting on.

Meaning of Beta

Beta measures the volatility or risk of a particular asset compared 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 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are three stocks that qualified the screening:

Chesapeake Energy Corporation is a leading oil and gas exploration and production player with a footprint in the prolific Marcellus, Haynesville and Eagle Ford shale plays.