Evercore ISI Recommends Negative Beta Stocks to Counter September Volatility

Equity markets opened September on fragile ground as the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each ended a three-day decline partly fueled by rising bond yields. Investors are wary of the impact of surging oil prices on inflation, a factor that already weighed on prices in August. According to CNBC, volatility could intensify due to the interest rate environment, geopolitical tensions, and the U.S. midterm elections. In this context, Evercore ISI proposes a coverage strategy based on stocks with historically negative daily beta. "Buying Negative Beta stocks helps a long-term oriented portfolio 'ride out' volatility events," write strategists led by Julian Emanuel (source: CNBC).

The firm analyzed all 500 components of the S&P 500, seeking out shares whose daily movements over the past six months have trended inversely to the index. The screening identified 115 negative beta stocks in September, down from 121 in August, before narrowing the list to the twenty most pronounced. These twenty stocks form the core of Evercore ISI's September recommendation. They are presented as a "synthetic put option" on the broader market, capable of cushioning price shocks. The firm highlights that the selection covers financials, utilities, basic consumer goods, and energy sectors, which account for nearly 70% of the total (source: CNBC).

Evercore ISI Recommends 20 Negative Beta Stocks to Counter September Volatility

Evercore ISI has published a list of 20 stocks with the most negative daily beta among the 115 identified. The selection is based on a six-month correlation calculation, each stock showing a tendency to move inversely to the S&P 500. Analysts note that these stocks have historically limited portfolio losses during volatility spikes, such as those seen in August. The approach aims to offer investors passive protection without resorting to options or futures contracts. "Buying Negative Beta stocks helps a long-term oriented portfolio 'ride out' volatility events," reiterates Julian Emanuel (source: CNBC).

The list includes shares from sectors deemed counter-cyclical, notably finance, energy, and basic consumer goods. Evercore ISI notes that the sector concentration enhances the ability of these stocks to act as a safety net when equity markets decline. The firm does not recommend overweighting these stocks but integrating them as a diversification complement. The selection was refined to exclude shares where liquidity or market capitalization could complicate practical implementation. Investors are advised to check the availability of each stock on their brokerage platforms.

Financials, Utilities, and Energy Make Up Nearly 70% of Negative Beta Stocks

The four dominant sectors—financials, utilities, basic consumer goods, and energy—account for nearly 70% of the retained shares. This overrepresentation is explained by their sensitivity to interest rate fluctuations and energy prices, factors that tend to invert their performance relative to growth stocks. For example, banks often benefit from rising rates, while technology stocks face downward pressure. Similarly, utilities offer stable cash flows that attract investors during market turbulence. Energy, for its part, reacts strongly to oil price fluctuations, creating a dynamic opposite to the broader market.

Evercore ISI emphasizes that the combination of these sectors creates natural coverage: when the S&P 500 declines, the returns of financial, utility, or energy stocks tend to strengthen, thereby softening overall losses. This inverse correlation has been observed during previous episodes of rising bond yields, such as in September 2026. Analysts recommend monitoring macroeconomic indicators—such as U.S. Treasury yields and oil prices—to anticipate sector movements. The sectoral breakdown also helps reduce risk exposure to a specific industry.

Occidental Petroleum Leads with Most Negative Beta at -1.23 and $3 Billion Cash Flow

Occidental Petroleum (OXY) stands out with a beta of -1.23 over six months, the fourth most negative among the twenty selected stocks. The producer reported $3 billion in available cash flow from continuing operations, the highest since the third quarter of 2022. During the same quarter, Occidental reduced its debt by $1.9 billion, bringing it to $11.8 billion, thereby strengthening its financial health. Stephen Richardson, Evercore ISI analyst, assigns OXY an "outperform" rating. The stock is presented as effective protection against oil price volatility, with the sector described as a "synthetic S&P 500 put option" (source: CNBC).

Strong cash flow and debt reduction provide Occidental room to invest in new projects, particularly in South America. The company has also indicated its intention to continue a debt-reduction strategy while maintaining stable production. According to Richardson, the combination of highly negative beta and robust financial position makes Occidental particularly attractive for portfolios seeking to mitigate market declines. The stock has thus been included among Evercore ISI's top 20 preferred shares.

Chevron, with a Beta of -0.90, Aims to Double Venezuelan Production to 600,000 bpd by 2031

Chevron (CVX) features among the negative beta stocks with a beta of -0.90, according to Evercore ISI's screening. The company announced a $7 billion investment plan to double its production in Venezuela, increasing from 280,000 to 600,000 barrels per day by 2031. This expansion aims to capitalize on rising oil prices while offering inverse exposure to the S&P 500 through its negative beta. Stephen Richardson also assigns Chevron an "outperform" rating, reinforcing its appeal as sectoral coverage. The Venezuelan project fits into a strategy of geographic diversification of production.

Chevron's investment plan relies on production-sharing agreements with the Venezuelan government, ensuring stable supply. The company plans to finance the project partly through operational cash flow, limiting the impact on its debt. Chevron's negative beta, combined with its expansion, offers investors dual functionality: participation in rising oil prices and protection against equity market declines. This dynamic was highlighted in Evercore ISI's report as a key selection element.

Consumer Staples and Utilities, Such as Kroger and Altria, Offer Additional Protection

Among the negative beta stocks, Evercore ISI also selected defensive consumer staples shares, including supermarket giant Kroger and tobacco manufacturer Altria. These companies benefit from recurring revenue streams and relatively inelastic demand, making them less sensitive to market fluctuations. Their negative beta contributes to stabilizing portfolios when the S&P 500 experiences corrections. Analysts note that these stocks offer additional protection, particularly during rising bond yields.

Their inclusion in Evercore ISI's list reflects the intention to cover different angles of volatility: while financials and energy react to interest rates and oil prices, consumer staples and utilities offer resistance to macroeconomic shocks. Investors can thus combine several types of protection within the same portfolio. This multi-sectoral approach enhances overall resilience against September uncertainties (source: CNBC).

Integrate Negative Beta Stocks into a Long-Term Portfolio

For investors seeking to "ride out" volatility, Evercore ISI recommends allocating a small portion of the portfolio—typically 5% to 10%—to identified negative beta stocks. This exposure allows benefiting from inverse correlation without sacrificing overall portfolio performance. Shares can be purchased directly or through listed funds, such as the S&P 500 PEA ETF, which replicates the index while offering the option to select negative beta stocks within the same basket. The strategy fits a dynamic diversification approach adapted to market cycles.

Evercore ISI has thus identified 20 negative beta stocks, covering nearly 70% of the sector weight in the selection, and estimates that their inclusion can reduce portfolio volatility by several percentage points. The recommendation is based on historical data and current macroeconomic conditions, including rising bond yields and geopolitical uncertainties. By following this approach, investors can protect against sharp movements of the S&P 500 while maintaining market exposure (source: CNBC).