BALTIMORE ( Stockpickr) -- Ask any investor, and they're sure to agree that 2011 has been nothing if not volatile. With the New Year right around the corner, there's no reason to think that the threats of the European debt crisis, Congressional stalemates, and a double-dip recession are about to abate just because the calendar ticks over to 2012. Instead, it pays to get defensive in this market.

Defensive stocks include companies in recession-resistant industries, firms that have massive cash hoards in their coffers, and companies that pay out income streams directly to shareholders. Not only are defensive stocks a wise core holding for any investor right now, a handful of these protective plays are offering short squeeze potential to investors right now.

>>5 Stocks That Could Rocket Higher

Today, we'll look at five defensive investments that could potentially see a short squeeze in the New Year.

In case you're not familiar with the term, a short squeeze is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing share price to skyrocket. One of the best indicators of just how high a short-squeezed stock could go is the short interest ratio, which estimates the number of days it would take for short-sellers to cover their positions. The higher the short ratio, the higher the potential profits when the shorts get squeezed.

Naturally, these plays aren't without their blemishes -- there's a reason that these stocks are being heavily shorted. But for investors looking for exposure to a speculative play with a beefier risk/reward tradeoff, these could be powerful upside plays for the coming year.

Without further ado, here's a look at our list.

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