Investors utilize various metrics and indicators to identify defensive stocks, which are known for their stability and resilience during economic downturns. One key metric is the beta coefficient, which measures a stock's sensitivity to market movements. Defensive stocks typically have betas lower than 1, indicating less volatility compared to the broader market.

Another important indicator is the dividend yield. Defensive stocks often belong to mature companies with stable cash flows, enabling them to pay consistent dividends. A high dividend yield suggests a reliable income stream for investors, which can cushion against market fluctuations.

Stability in earnings and revenue growth is also crucial. Companies with consistent performance across economic cycles are more likely to be defensive in nature. Investors often look for a history of steady earnings growth and a strong competitive position within their respective industries.

Additionally, metrics related to financial health, such as debt levels and liquidity ratios, are essential. Defensive stocks typically have strong balance sheets with manageable debt and ample liquidity to weather economic uncertainties.

Furthermore, sector-specific indicators can be insightful. Certain sectors, like utilities, consumer staples, and healthcare, are traditionally defensive due to the essential nature of their products and services. Analyzing sector trends and dynamics can help investors identify defensive opportunities within specific industries.

Overall, a combination of these metrics and indicators provides investors with a comprehensive framework for identifying defensive stocks that offer stability and protection during turbulent market conditions.