The stock market is often thought of as a rollercoaster. However, depending on what you are investing in, that rollercoaster could be boring or have you retching in the trash can after you get off.
That is because stocks, depending on their market capitalization, earnings, news releases, or reputation, can have high volatility, which can cause alarming price movements. And even in the midst of the pandemic, we saw reliable, income-paying restaurant stocks collapse in price due to lockdowns materially impacting their business.
When we seek out the most volatile stocks, we often do so intending to trade these stocks.
That's because nobody wants to trade a stock that moves a percent or two per day. If you're a trader, you want to be trading stocks with large swings in share price, so we can take advantage of those price swings on either the long or short end.
How can we measure stock market volatility?
Beta is a suitable way to measure the volatility of Canadian stocks. When we speak on a stock's beta, we compare how much that stock will move relative to its benchmark index.
For example, a company within the S&P 500 with a beta of "1.5" suggests that for every 1% move in the S&P 500, we can expect the stock to move 1.5%. If a company has a beta of 0.5, we can expect for every 1% move in the index, it will only move 0.5%.
The lower the beta, the lower the overall volatility of the stock itself. Higher-volatility stocks are often correlated with a high beta. You will often see low-beta stocks in the utility and industrial sectors. In contrast, high beta stocks often reside in healthcare stocks, or the technology, mining industries.
Typically, the S&P 500 is used as a benchmark for most U.S. stocks' beta calculations. However, sites can use a different benchmark if they wish. For Canada, the Toronto Stock Exchange is often used.
Is there an index we can use for volatility?
The VIX index is excellent for judging the relative volatility of the markets.
The VIX's goal is to produce a measure of the constant, 30-day expected volatility of the U.S. stock markets. Many people swing trading stocks or day trading stocks will take advantage of and attempt to profit off short-term fluctuations in the price of the VIX.
Considerations when investing in the most volatile stocks
Traders often seek out high-volatility stocks to try and turn out significant gains. However, what many get tunnel vision with is the gains aspect of volatile stocks.
They tend to forget about the losses, which can be severe and dramatic, and show up quick in stocks with high price volatility.
If your portfolio is made up exclusively of high-volatility stocks, you are likely putting yourself at extensive risk.
Figure out if trading is suitable for you. Suppose you want to give it a shot. In that case, I'd suggest setting aside a tiny portion of your portfolio, one you'd be comfortable losing, to start trading. It's important to remember that you have less than a 10% chance of breaking even or making money when it comes to day trading.
If you buy and sell these high-volatility stocks, know there is a good chance it will be an unprofitable endeavour.
With that said, let's look at some of the most volatile stocks to be trading right now.
Some parameters of this list of high-volatility stocks before we begin
We've screened the S&P 500 and around 400 stocks in Canada and have sorted them by their most recent beta. So, this list will not contain highly volatile penny stocks or stocks not listed on major exchanges.
Make no mistake about it, however, even some of the stocks listed below on the major exchanges have significant amounts of volatility.
This list was last fully updated on December 5th, 2022.
What are the 10 most volatile stocks?
- McEwen Mining (TSE:MUX)
- Ovintiv (TSE:OVV)
- Paramount Resources (TSE:POU)
- APA Corp (APA)
- Cardinal Energy (TSE: C.J.)
- Cineplex (TSE:CGX)
- Bombardier (TSE:BBD.B)
- Aurora Cannabis (TSE:ACB)
- Enerplus Corp (TSE:ERF)
- Caesars Entertainment (CZR)
McEwen Mining (TSE:MUX)
McEwen Mining Inc is a mining and minerals production and exploration company focused on precious and base minerals in Argentina, Mexico, and the United States. The company's overall revenue is mainly derived from producing gold and silver, each comprising roughly half of the total sales. The company owns and operates the wholly-owned El Gallo 1 mine in Mexico and has a minority shareholding in the company that operates the San Jose mine in Argentina. More than half the company's gold output is produced by the El Gallo 1 mine. The remaining gold production, and the majority of silver production, is produced by the San Jose mine.
Ovintiv is an independent oil and gas producer with key assets in the Permian, Eagle Ford, Montney, and Duvernay areas. At the end of 2019, the company reported proven net reserves of 1,348 million barrels of oil equivalent. Net production averaged 543 thousand barrels of oil equivalent per day in 2020 at a ratio of 53% oil and natural gas liquids and 47% natural gas.
Paramount Resources (TSE:POU)
Paramount Resources Ltd is a Canadian energy company that explores, develops, produces, and markets natural gas, crude oil, and natural gas liquids. The company takes part in exploration and production in Alberta and British Columbia. Sales for Paramount's products are priced in many markets spanning the United States and Canada. Contracts can have daily, monthly, or long-term agreements depending on the product. Assets for exploration and production are acquired through royalties paid to provincial governments and freehold landowners.
APA Corp (APA)
Based in Houston, APA Corp. is an independent exploration and production company. It operates primarily in the U.S., Egypt, the North Sea, and Suriname. At year-end 2021, proven reserves totalled 913 million barrels of oil equivalent, with net reported production of 388 mboe/d (64% of which was oil and natural gas liquids, with the remainder comprising natural gas).
Cardinal Energy (TSE: C.J.)
Cardinal Energy Ltd is an oil-focused Canadian company. The company's principal business activity is the acquisition, exploration, and production of petroleum and natural gas in the provinces of Alberta and Saskatchewan.
Cineplex is a diversified media company that operates chains of movie theatres. The company has four reporting segments: film entertainment and content; media; amusement and leisure; and location-based entertainment. The film entertainment and content segment includes revenue from theatre attendance. The media segment includes cinema media and digital place-based media operations. The amusement and leisure reporting segment manages the operation and distribution of gaming and vending equipment. Formerly housed in the amusement and leisure segment, the location-based entertainment business derives revenue from entertainment restaurant chains like The Rec Room and Playdium. The film entertainment and content segment generates most of its revenue from audiences located entirely in Canada.
Bombardier Inc is engaged in the manufacture of business aircraft. It designs, manufactures, markets, and provides aftermarket support for Learjet, Challenger, and Global business jets. Their offerings span from the light to large categories; for a broad portfolio of commercial aircraft in the 50 to 100-seat categories, including the CRJ550, CRJ700, CRJ900, CRJ1000 regional jets, and the Q400 turboprop. The company mainly operates in Europe, North America, Asia-Pacific, and others. The majority of the revenue is generated in North America.
Aurora Cannabis (TSE:ACB)
Aurora Cannabis, headquartered in Edmonton, Canada, cultivates and sells medicinal and recreational cannabis through a portfolio of brands that includes Aurora, CanniMed, Daily Special, MedReleaf, and San Rafael '71. Although the company primarily operates in Canada, it has expanded internationally through medical cannabis exporting agreements or cultivation facilities in more than 20 countries.
Enerplus Corp (TSE:ERF)
Enerplus Corp produces and develops crude oil and natural gas assets in Canada and the United States. The majority of oil production is derived from the Williston and Waterfloods basins, with the Marcellus providing a significant portion of natural gas production. Enerplus acquires the right to use assets through royalties paid to government entities, land owners, and mineral rights owners. Crude oil and natural gas are sold to customers in both countries, where assets are held and can be sold either at the well or a fixed destination.
Caesars Entertainment (CZR)
Caesars Entertainment includes around 50 domestic gaming properties across Las Vegas (50% of 2021 EBITDAR before corporate and digital expenses) and regional (63%) markets. Additionally, the company hosts managed properties and digital assets, the latter of which produced material EBITDA losses in 2021. Caesars' U.S. presence roughly doubled with the 2020 acquisition by Eldorado, which built its first casino in Reno, Nevada, in 1973 and expanded its presence through prior acquisitions to over 20 properties before merging with legacy Caesars. Caesars' brands include Caesars, Harrah’s, Tropicana, Bally’s, Isle, and Flamingo. Also, the company owns the U.S. portion of William Hill (it sold the international operation in 2022), a digital sports betting platform.
What is the most volatile stock in 2022?
McEwen Mining (TSE:MUX). Out of the 500 stocks on the S&P 500 and the 400+ Canadian stocks we have inside our stock screener, McEwen Mining, which has a beta of over 5.18, was the most volatile stock in 2022.
A beta of 5.18 suggests that when the TSX Index moved 1%, McEwan moved more than 5 times that.
How do I find the most volatile stock?
You can utilize most stock screeners to identify the most volatile stocks. There are a variety of ways to define volatility. Most use beta, but other investors will look up stocks making the most significant moves over a week, two-week, or even a month-long timespan to take advantage of short-term volatility.
Over the short term, a stock with a low beta could be more volatile than usual because of a poor earnings report, a news release, or even a potential management change. So, short-term price movements in this regard are great screens.
Which type of stocks are most volatile?
You will typically see high volatility in the energy, mining, pharmaceutical stocks, and technology sectors. There are plenty of volatile stocks in other sectors, but these tend to have the highest betas.
Which investments are most volatile?
Investments in companies with small market capitalizations, low volumes, and overall low share floats tend to be the most volatile. Wide swings in stock price can happen based on just a few transactions if there is not a high volume of trade.
You will typically see this in the mining sector, particularly companies that are pre-revenue and just exploring. Single news headlines can send these stocks up by triple digits. Another highly volatile investment would be penny stocks, for most of the reasons stated above.
The high volatility of these stocks and sectors makes them extremely popular for day traders.
Which sector is least volatile?
If you're looking for lower volatility stocks, you'll likely want to look to sectors that provide stable cash flows and contain larger blue-chip companies. The consumer staple, utility, and healthcare sectors often offer this.