Adding low-volatility stocks to this popular value-oriented portfolio

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Adding low-volatility stocks to this popular value-oriented portfolio
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Removing the most volatile stocks may improve the returns, or lower the downside risk, of the Canadian Free Cash portfolio

November can be a cold and gloomy month for many Canadians, but they can ward off its chill by adding a little Irish cheer to their hot chocolate as they watch the first snows roll in.

The Canadian Free Cash portfolio starts its search for bargains with the largest 300 common stocks on the Toronto Stock Exchange. It then selects the 10 stocks with the lowest enterprise-value to free-cash-flow ratios, buys an equal dollar amount of each one and rebalances monthly. I tested the idea by creating two variants of the original portfolio that exclude highly volatile stocks in slightly different ways. The first is an eight-stock variant that removes the two most volatile stocks from the regular portfolio.

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