Some stocks move around in price more than others and this is often related to how stable or otherwise their earnings are, as well as other factors.
For example, utility companies and food retailers have steady revenues which means their earnings are more predictable than those for cyclical parts of the economy like hospitality and manufacturing.
The variability of stock prices is sometimes referred to as volatility, and this can be measured in different ways, which we discuss shortly.
From a portfolio construction and risk perspective, it can be beneficial to have exposure to a diverse range of stocks operating in different sectors with different volatilities.
But it is worth being aware of the effect that individual share price variability can have on overall portfolio volatility.
Are stock markets more volatile in the Autumn?
September and October have historically been associated with elevated stock market price swings.
Academic studies have shown that the November to April period has often outperformed the May to October period with lower price variability. This is sometimes framed as the ‘Sell in May and go away’ strategy.
However, it isn’t nailed on every year, and the data is skewed by the very few occasions which have produced scary outcomes, (like the 1987 crash) so statistically speaking, the evidence is not conclusive.
That said, understanding the volatility of different parts of the stock market can be useful in thinking about portfolio construction and risk.
How do you measure volatility?
There is no perfect way to calculate volatility. We have looked at companies in the FTSE 350 from the perspective of their annual high/low price ranges and compared the range to the average price over the last year.
This does not mean the range will be the same next year or the year after that, but it does provide a comparable measure of annual volatility.
As a common-sense check, in the tables we have also provided a stock’s beta which measures the sensitivity of the stock price to the market. It’s based on the price performance over the prior five years.
A beta of one means that for a 1% move in the index, the stock has historically moved around 1% on average, in the same direction. A beta of 0.5 would mean that for the same 1% move in the index the stock will have moved 0.5% and a beta of 1.5 implies an average move of 1.5%. It is worth noting that having a beta higher than one does not mean that a stock outperformed the market.
Least volatile FTSE 350 companies
Unsurprisingly, food retailers, Tesco and Sainsbury’s have been among the least volatile stocks in the FTSE 350 over the last year. People shop for essential household items regardless of the state of economy, which provides a stable revenue base for grocers.
Likewise, medical products provider Convatec and tobacco company Imperial Brands operate in predictable end markets which provide visibility of revenues.
In a recent trading update Convatec projected its second half operating margin would be ‘materially’ higher than the first half amid accelerating demand for infusion care products. The company also announced a new £200 million share buyback, to be completed by the end of 2026.
The world’s largest catering group Compass benefits from structural demand for outsourced catering services. The company reported robust third quarter revenue growth of 7% and reiterated its annual profit growth target of over 11%.
Domino’s Pizza benefits from a stable profit stream due to its high-margin, capital-light franchising business model, although the company is not immune to wage and cost inflation impacting franchisees.
Most volatile FTSE 350 companies
Housebuilders and recruiters feature on the most stocks volatile list which reflects a difficult period for earnings impacted by higher interest rates.
The seesawing of Hays share price over the last year, which has fluctuated between a low of 28.6p and a recent high of 78.5p exemplifies the high volatility often seen in the most cyclical sectors.
Recruiters Michael Page and Hays have enjoyed strong price gains in recent weeks following raised 2026 profit guidance by Hays, helped by projected cost savings coming in ahead of target.
Since listing its shares on the stock market in 2024, low-cost computing specialist Raspberry Pi has experienced large swings in its share price, with a low of 253p and a high of over £10.
Surging demand for memory chip prices related to the global AI infrastructure buildout led to a strong rally in the shares to all-time highs before some profit taking over the last two months.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
