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Stock Market Prognosticator
Mar 27
Comment
I want you to picture the following scene at a large mutual fund family. A group of highly paid analysts and portfolio managers are sitting in a wood paneled conference room with a commanding view of a harbor. The assembled brainpower are the...
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more ▼WIKI ANALYSIS
WIKI ANALYSIS| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
How a company's stock price fares relative to its peers (or relevant asset group) is referred to as Relative Performance. It is also called Relative Return and is similar to Relative Strength.
For example, in 2008, Exxon Mobile (XOM) comprised 4.14% of the S&P 500 (SPY). As such we would expect Exxon Mobile's price to have a relative performace similar to the Spyders. The price performance of XOM relative to XLE would be even closer given that it currently constitutes 17.03% of that energy ETF.
Absolute performance is another term that is often encountered when reading about relative performance.
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