So
the higher beta cyclical stocks benefit from the overall markets seasonality.
Not exact matches
EQUITIES THEMATIC — SAME AS IT EVER WAS: Small Cap /
High Beta /
Cyclicals / Value /
High Short Interest / Inflation / Domestic Exposure / Weak Balance Sheet over Low Vol / Defensives / Anti-
Beta / Growth / Quality / Strong Balance Sheet.
They test this strategy on combinations of seven indexes comprising a spectrum of risk (listed lowest to
highest): BofA Merrill Lynch 5 - 7 Year Treasury Index (Treasuries); CBOE S&P 500 Buy - Write Index (BuyWrite); S&P 500 Low Volatility Index (Low Volatility); S&P 500 Index (SP500); Russell 2000 Index (R2000); Morgan Stanley
Cyclicals Index (
Cyclicals); and, S&P 500
High Beta Index (
High Beta).
The low
beta, or relative risk and performance to the market, will show that these stocks tend to either perform better - or at least not as poorly - as
cyclical stocks in bad times and will usually not be most investors» focal points during the boom part of the business cycle when investors are busy chasing technology stocks and
high - growth companies.
However, investors might consider the
cyclical nature of the company as well as its
high beta.
While small cap stocks have a
higher beta and returns on average, the asset classes actually perform a
cyclical dance in which they periodically exchange risk and stock performance leadership.