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Indicator Guide > Relative Strength & Overlays > Price Comparison
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Price Comparison

The Price Comparison (or comparative performance) is useful for comparing the performance of one stock relative to another (or to an index).

Price Comparison plots the closing price of a second stock (or index) onto the price chart. The scale of the second stock (or index) is adjusted so that both price lines commence at the same point.

Example

Proctor and Gamble is charted with Proctor & Gamble closing price Closing price, Johnson & Johnson price comparison Price comparison to Johnson & Johnson and Dow Jones Industrial Average price comparison Price comparison to the Dow Jones Industrial Average.

Proctor & Gamble closing price compared to Johnson & Johnson, and Dow Jones Industrial Average

Observe how the two stocks perform relatively evenly over 1999. Both declined over the first two months of 2000 (this was in line with the Dow) before PG's sharp fall in early March - after an earnings disappointment.

Setup

To set up the Price Comparison indicator:

  1. Open the Indicator Panel
  2. Select Price Comparison in the left column
  3. Select the comparative security or index from the drop-down menu
  4. Select Daily, Weekly or Monthly from the center panel
  5. Select Apply to Project or Apply to Securityfrom the center panel.
    Apply to Project applies the the indicator to all securities in the current project.
    Apply to Security applies the the indicator to the current security only.
  6. Save the settings using ">".

Formula

The Price Comparison line is calculated using the ratio of closing price to that of another security/index, on the first day of the chart. This means that the starting point of the Price Comparison will vary according to the Time Period selected. The line may appear to move if you change time periods; but the slope remains the same.


Tip

Settle on one or two standard time periods to be used when viewing Price Comparison charts (eg. 3 Years - Weekly; 6 Months - Daily).



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