Stock Relative Performance Visualizations

Relative performance tells you when a stock performs better or worse than another stock. For example, if a stock increased 10 percent and another stock increased 18 percent in the same period, the second stock out performed the first stock by 8 percent or the first stock under performed the second stock by 8 percent.

The Complete Trading Model (CTM) relative performance analysis compares the percent return of a stock trade to the percent return of the same trade (same buy date/sell date) for another stock. The CTM relative performance of a trade is the difference (in percent) of the first stock percent return and percent return of the second stock. If the difference is positive, the first stock out performed the second stock for the trade. If the difference is negative or zero, the first stock under performed the second stock for the trade.

You may compare any combination of stocks and indices - stock with another stock, stock with a sector index or market index, and index with another index. Trade intervals may be days, weeks, months or years but must be the same interval when making comparisons. For example, you could compare:

The semiconductor stock Intel (INTC) to the Philadelphia Semiconductor Index (SOX) for a period of 100 weekly trades.
CSCO Systems (CSCO) to the Nasdaq Composite Index for 200 daily trades.
Two stocks such as Ford Motor (F) and General Motors (GM) for 300 monthly trades.

The results of the CTM relative performance analysis are displayed on two charts:

The Relative Performance Percent Return Chart displays in three dimensions the magnitude of the differences for all out-performing and under-performing trades. Some of the trades may be hidden because of the charts spatial orientation.
The Relative Performance Map displays in two dimensions the out-performing and under-performing trades excluding their magnitudes. This chart enables you to see all out-performing and under-performing trades.

In each chart an out-performance trade is shaded in yellow and an under performing trade is shaded in blue.

Relative Performance of Cisco Systems and the Nasdaq

The following relative performance chart shows Cisco Systems (CSCO) weekly trades compared to Nasdaq weekly trades from 1998 to 2002.

Of the 1,830 trades, 874 (48%) of the CSCO trades out performed like Nasdaq trades and 956 (52%) under performed like Nasdaq trades. The relative performance chart displays the differences of the 1830 trades. The buy and sell axis are the same as on the CTM 3-dimensional percent return chart.

Out-performing trades are in yellow and under-performing trades are in blue. The pattern shows that CSCO consistently outperformed the Nasdaq on the upside and early on the downside after the March 2000 peak. But as both CSCO and the Nasdaq declined, CSCO under performed the Nasdaq. As the Nasdaq and CSCO rose in 2003, CSCO out performed the Nasdaq.

Relative Performance Map

The relative performance map shows the 874 out-performing trades (yellow) and the 956 under-performing trades (blue).

The chart appears flat because it does not show the magnitudes of the performance differences. And because you are looking down perpendicularly on the trade differences, you can see all of them.

See Stock Visualization Articles on buyupside.com for more visualizations and charts.

Updated February 20, 2009.