The most volatile UK stocks—in this case meaning they trade on the London Stock Exchange and are a member of a UK index like the FTSE All-Share—of 2022 are:
- Synairgen
- Vast Resources
- Tertiary Minerals
- Tintra
- Catenae Innovation
- Midatech Pharma
- Genedrive
- MobilityOne
- Baron Oil
Well that’s the top 10 most volatile of 1,194 Uk stocks according to daily volatility measured on a daily return series. There are maybe a few names on that list that some investors might be familiar with. Synairgen, with a daily volatility of 19.2% for example, had a price surge in 2020 because its SNG001 drug—an inhaled beta-interferon—was being trialled for use against COVID-19 infections. Phase II trial data looked promising, and ended support to an eye-watering valuation. In February 2022 poor phase three trial results for SNG001 were released and the share price collapsed back to where it started 2020.
For completeness the rest of the top tens volatility was: Vast Resources with 19.0%, Tertiary Minerals with 15.9%, Tintra with 15.4%, Catenae Innovation with 15.2%, Midatech Pharma with 14.9%, Genedrive with 14.3%, MobilityOne with 14.1% and Baron Oil with 14.0%. For reference the average daily volatility of all 1,194 UK stocks was 6.0%.
Are bigger UK stocks less volatile?
Since all of the top ten have market capitalisations under £27m, its worth investigating if larger market capitalisation stocks tend to be less volatile. Based on this data set it seems the answer is yes because market capitalisation and volatility are negatively correlated cross these 1,194 UK stocks, meaning that as market capitalisation rises, volatility decreases. But, the relationship is weak: The correlation coefficient is -0.14.
Dividing the dataset by index membership demonstrates the trend particularly well. Take the broadest indexes: the FTSE All-share, which consists of 888 stocks trading on the London Stock Exchanges Main Market stocks and the FTSE Aim All-Share which consists of 706 stocks listed on the Alternative Investment Market (AIM). The former has an average market capitalisation of £5,856m and an average volatility of 3.1% with a standard deviation of 1.1%. The later has a lower average market cap of £118m and a higher average volatility of 5.0% with a higher standard deviation of 2.5%.
| Index | Average Market Capitalisation (£m) | Average Volatility | Standard Deviation of Volatility |
| FTSE All-Share | 5,856 | 3.1% | 1.1% |
| FTSE AIM All-Share | 118 | 5.0% | 2.5% |
I think I can fairly confidently say that larger UK stocks tend to have lower volatility. But, we can go further. I can break the FTSE All-Share into its constituent indexes which, in order of decreasing average market cap, are the FTSE 100, FTSE 250, FTSE SmallCap and FTSE Fledgling. As expected the average volatility increases as we move through them in this order from 2.64% to 3.00% to 3.43% and finally to 3.44%. The standard deviation of volatility also increases.
The only wrinkle is when I look at the FTSE AIM 100, which consists of the largest 100 companies listed on the Alternative Investment Market. The average market cap here is £575m, which is larger than the FTSE SmallCap’s £286m and the FTSE Fledgling’s £52m. However, its average volatility is higher than the pair of them at 3.48%. What this suggests is that the market a stock trades on also influences volatility. The AIM has a lighter regulatory touch than the Main Market. AIM rules set no free-float limit, and higher free-floats tend to make a stock more liquid and less volatile for one thing.
Looking back on those top 10 UK stocks for volatility, what indexes do they belong to? Well, its perhaps not a surprise that they all belong to the FTSE AIM All-Share.
The most volatile FTSE 100 stocks of 2022
So what are the most volatile stocks in each of the Main Market indexes then? For the FTSE 100, the top ten with their associated volatilities are as follows:
- Harbour Energy – 5.95%
- Rolls-Royce – 5.04%
- International Consolidated Airlines – 4.53%
- Airtel Africa – 4.11%
- Ocado – 4.02%
- Melrose Industries – 4.01%
- Intermediate Capital – 3.67%
- Entain – 3.61%
- JD Sports Fashion – 3.55%
- M&G – 3.44%
I would suggest that the names on this list are more familiar to investors. How about the FTSE 250? The top ten most volatile FTSE 250 stocks are:
- Aston Martin Lagonda – 6.88%
- Elementis – 6.58%
- Tullow Oil – 6.34%
- Micro Focus International – 5.96%
- Hammerson – 5.86%
- Carnival – 5.75%
- Darktrace – 5.50%
- SSP – 5.14%
- RPS – 5.13%
- National Express – 4.93%
Again, these look like more familiar names compared to the AIM listed stocks from the overall top ten. I might as well go another step and list the top ten most volatile stocks of the FTSE SmallCap index:
- De La Rue – 9.00%
- Petra Diamonds – 7.33%
- Marston’s – 6.80%
- Restaurant – 6.24%
- Superdry – 6.17%
- Funding Circle – 6.09%
- Nanoco – 5.87%
- Lookers – 5.82%
- Hyve – 5.70%
- Contain – 5.39%
A familiar pattern is repeating itself. The most volatile stocks from the FTSE 100 are not as volatile from those of the FTSE 250, which are not as volatile from the most volatile stocks of the FTSE SmallCap index.
Which sectors were the most volatile in 2022?
Of the 10 economy sectors of basic materials, consumer cyclical, consumer defensive, energy, financials, healthcare, industrials, technology, telecoms and utilities, which has been the most volatile in 2022? Going into this I would imagine healthcare and consumer defensives to be right near the bottom, and consumer cyclicals and energy to be right at the top.
After the chaos in the energy markets in 2022, it is of course no surprise that that sector has been the most volatile in 2022. What is surprising is healthcare being in third place. This, along with consumer defensive are typically considered, well, defensive sectors. But, consider that healthcare in this instance would also include biotechnology stocks listed on the AIM, perhaps with low market caps waiting for a breakthrough trial result. That’s why healthcare, when considered across the full range of UK stocks, looks a little less safe then it might first be imagine to be.
DISCLAIMER: James J. McCombie owns shares in National Express and Rolls-Royce. The Storied Investor has no beneficial ownership interest in any of the shares mentioned.
The Storied Investor 