Stocks found more downside Thursday morning, as the S&P 500 turned negative on the year.
So if one fears more losses ahead, what's an investor to do?
One option would be to allocate more of one's portfolio to stocks that don't tend to move in lockstep with the market.
The traditional gauge of how much a given stock is levered to the overall market's moves is a metric known as "beta." By operating on the correlation between the moves of a stock and a relevant index (most commonly the S&P 500) and the average magnitude of the stock's and the index's moves, beta tells an investor roughly how much she is exposed to the index as a whole through that given stock.
Generally, higher-beta names will be stocks that are either very volatile, or highly levered to the overall economy—high-end retailers, semiconductor stocks, homebuilders and the like. Meanwhile, low-beta stocks march to the beat of their own metaphorical drum.
Over the past three years, these companies have enjoyed no real relationship with the overall index, based on a five-year examination of monthly returns.