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--- technical_indicators:price_relative [2019/06/24 19:39]
127.0.0.1 external edit
+++ technical_indicators:price_relative [2023/09/01 19:58]
jayanthi [Calculation]
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 ====== Price Relative / Relative Strength ======
-===== Introduction =====
+===== What Is the Price Relative Indicator? =====
-The Price Relative indicator compares the performance of one security to another with a ratio chart. This indicator is also known as the Relative Strength indicator or Relative Strength Comparative. Often, the Price Relative indicator is used to compare the performance of a stock against a benchmark index, such as the S&P 500. Chartists can also use the Price Relative to compare the performance of a stock to its sector or industry group. This makes it possible to determine if a stock is leading or lagging its peers. The Price Relative indicator can also be used to find stocks that are holding up better during a broad market decline or showing weakness during a broad market advance.
+Also known as the Relative Strength indicator or Relative Strength Comparative, the Price relative indicator uses a ratio chart to compare the performance of one security to another.
+The indicator is often used to do the following:
+  * Gauge a stock's performance against a benchmark index, such as the S&P 500.
+  * Asses a stock's performance relative to its sector or industry group, so you can determine if a stock is outperforming or underperforming its peers.
+  * Identify stocks that either hold up well during broad stock market declines or exhibit weakness during market upswings.
 **Note:** At StockCharts.com, a **ratio ticker symbol** is used to create a Price Relative indicator. A ratio symbol consists of two ticker symbols joined together with a colon character (e.g., "IBM:$SPX", "$INDU:$GOLD"). The value of a ratio ticker symbol is equal to the close of the first symbol divided by the close of the second symbol.
-===== Calculation =====
+===== How To Calculate the Price Relative Indicator =====
 <code>
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 </code>
-The Price Relative indicator is simply the base security divided by the comparative security. Typically, the underlying security is a stock and the benchmark is the S&P 500. For example, chartists can use the Price Relative to show the performance of Starbucks (SBUX) relative to the S&P 500 ($SPX). This would simply be the price of Starbucks divided by the S&P 500. Starbucks is part of the consumer discretionary sector. Chartists could also view the performance of Starbucks relative to the Consumer Discretionary SPDR (XLY) with the appropriate [[docs>data#ratio_symbols_relative_strength|ratio symbol]] (SBUX:XLY). Chartists could also view sector performance relative to the S&P 500 (XLY:$SPX).
+The Price Relative indicator is simply the base security divided by the comparative security. Typically, the underlying security is a stock and the benchmark is the S&P 500. For example, chartists can use the Price Relative to show the performance of Starbucks (SBUX) relative to the S&P 500 ($SPX). This would simply be the price of Starbucks divided by the S&P 500. Starbucks is part of the consumer discretionary sector. Chartists could also view the performance of Starbucks relative to the Consumer Discretionary SPDR (XLY) with the appropriate [[https://support.stockcharts.com/doku.php?id=data#ratio_symbols_relative_strength|ratio symbol]] (SBUX:XLY). Chartists could also view sector performance relative to the S&P 500 (XLY:$SPX).
-{{chart_school:technical_indicators:price_relative:prel-1-sbuxsheet.png|Price Relative - Spreadsheet 1}}
+{{:technical_indicators:price_relative:prel-1-sbuxsheet.png|Price Relative - Spreadsheet 1}}
 {{:technical_indicators:price_relative:cs-pricerelative.xls?linkonly|Click here to download this spreadsheet example.}}
-The table above shows the Starbucks/S&P 500 Price Relative. The first value in row two is .0256 (30.66/1197.75). This ratio increases when Starbucks advances more than the S&P 500 or declines less than the S&P 500. This ratio decreases when Starbucks advances less than the S&P 500 or declines more than the S&P 500. For reference, the table also shows the percentage change in Starbucks and the S&P 500. The percentage change in Starbucks less the percentage change in the S&P 500 is also equal to the daily changes in the Price Relative. In row two, notice that Starbucks was down 2.66% and the S&P 500 was down 1.62%. The Price Relative moved lower (-1.04%) because Starbucks declined more than the S&P 500. Row three shows the Price Relative rising because Starbucks (+.50%) was up more than the S&P 500 (+.02%). The chart below shows the Price Relative in action.
+The table above shows the Starbucks/S&P 500 Price Relative. The first value in row two is 0.0256 (30.66/1197.75). This ratio increases when Starbucks advances more than the S&P 500 or declines less than the S&P 500. This ratio decreases when Starbucks advances less than the S&P 500 or declines more than the S&P 500. For reference, the table also shows the percentage change in Starbucks and the S&P 500. The percentage change in Starbucks less the percentage change in the S&P 500 is also equal to the daily changes in the Price Relative. In row two, notice that Starbucks was down 2.66% and the S&P 500 was down 1.62%. The Price Relative moved lower (-1.04%) because Starbucks declined more than the S&P 500. Row three shows the Price Relative rising because Starbucks (+0.50%) was up more than the S&P 500 (+.02%). The chart below shows the Price Relative in action.
 {{:technical_indicators:price_relative:prel-1-sbuxexam.png|Price Relative - Chart 1}}
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 ===== Using with SharpCharts =====
-The Price Relative is available in SharpCharts by using the "Price" indicator with [[http://stockcharts.com/docs/doku.php?id=data#ratio_symbols_relative_strength|a "Ratio" ticker symbol]] (e.g., "IBM:$SPX"). First, select the "Price" indicator. Second, in the parameter box, enter the symbol for the base security followed by a colon (":") and then the symbol for the comparative security.
+The Price Relative is available in SharpCharts by using the "Price" indicator with [[https://support.stockcharts.com/doku.php?id=data#ratio_symbols_relative_strength|a "Ratio" ticker symbol]] (e.g., "IBM:$SPX"). First, select the "Price" indicator. Second, in the parameter box, enter the symbol for the base security followed by a colon (":") and then the symbol for the comparative security.
 Note that you can also use the "$SECTOR" and "$INDUSTRY" pseudo-symbols inside a ratio symbol. We will automatically replace those symbols with the appropriate sector or industry ETF/index.  For example, "IBM:$SECTOR" is the same as "IBM:XLK" inside of a SharpChart.
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 {{:technical_indicators:price_relative:prel-6-shch.png|Price Relative - SharpCharts}}
 ===== Further Study =====