| The beta of the S&P 500 is 1.0 by definition. This comparison doesn't help understand just how large the swings have been over the past three months, but they do show how all sectors moved in relation to the S&P 500. At the bottom of the scale is the Consumer Staples sector. This makes sense. Even though much of the country experienced stay-at-home orders, we still require consumer staples like food, beverages, and toiletries. This sector held up well in the face of the declines and subsequent recovery. The Health Care sector is a bit more surprising. As the COVID-19 pandemic escalated, hospitals began canceling elective procedures to help prevent the spread of the virus and to devote more resources to COVID-19 patients. But these actions are financially stressful for hospitals. While it is true that health care is extremely critical during this pandemic, it isn't necessarily true that the sector is making big profits. However, we have relied heavily on the Communication Services and Technology sectors as much of the country worked from home. It also makes sense that these two sectors have held up well. On the high end of the volatility scale were the Energy and Real Estate sectors. The market battered both sectors as the crisis worsened. Oil demand plunged as people stayed home, and commercial real estate came under tremendous financial stress as tenants saw their revenues plummet. The one sector that seems out of place here is the Utility sector. Historically, it is one of the lowest-volatility sectors. So what happened? It actually held up well initially, but when businesses began to close there were fears that profits would fall. But the performance of the Utility sector this year has been very much in line with the overall S&P 500. In fact, the year-to-date performance of the Utility Sector SPDR (XLU) is within 1% of the S&P 500. But beta measures daily moves, and the daily moves of the utility sector were greater than those of the S&P 500 during this time. From a longer-term perspective, however, utilities are in fact the least volatile sector. The 5-year beta for the Utility sector is 0.41, followed by Consumer Staples at 0.59 and Real Estate at 0.74. The Upside of Volatility But volatility isn't all bad. For example, the Energy sector took a deep dive in early March. But since then it has been the top performer among all sectors. From the bottom on March 23, the Energy Select Sector SPDR (XLE) has returned over 64%, which is 20% more than the second-best performing sector. You can make a lot of money in high-volatility sectors, but it's a high-risk, high-reward play. You have to be certain that this is the kind of investor you are before engaging in that kind of risk. If you aren't, stick to the lower end of the volatility scale. If you're looking for ways to make money with greatly reduced risk, follow the advice of my colleague, Amber Hestla. Amber Hestla is the chief investment strategist of our premium trading service, Profit Amplifier. Amber has devised a highly unusual but powerful tactic that turns tiny price moves into massive gains. The team at Investing Daily makes you this bold promise: Over the next 12 months, if the gains from all of Amber's winning trades don't add up to at least 1,000%… Just let us know, and we'll give you a second year of Profit Amplifier… absolutely free. Want to start making money with Amber? Click here for details. | 
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