or crashes as diversification reduces the correlation of investments held within a portfolio.
However, defensive stocks are not just useful during recessions; they can also appeal to traders with lower risk tolerances simply looking to preserve their capital. This article explains what defensive stocks are, why they are useful and how traders or investors can benefit from trading them., for an introduction into the world of stock trading.’ comprise of companies that experience little variation in earnings and dividend payouts regardless of the state of the overall economy.
It is important to note that holding defensive stocks provides no guarantee against negative returns; however, defensive stocks have historically weathered economic recessions better thanWhat are the most defensive stocksand generally exhibit the following characteristics:- Companies that maintain a low debt to equity ratio are better equipped to meet their debt repayments under difficult market conditions.