FIGURE 29: WATCHLIST WITH RELATIVE PERFORMANCE VS. DOW JONES INDUSTRIAL AVERAGE.
This watchlist contains all stocks from the Dow Jones Industrial Average. The relative performance benchmark indicator allows all stocks to be sorted according to their relative performance. Since the beginning of the current bull market (mid-March 2009), the Apple stock has the strongest outperformance against the benchmark, while Exxon Mobil lags the most.
TIP: You can also use the Relative Performance Benchmark Indicator in a watchlist. The following chart shows the shares of the Dow Jones Industrial Average with this indicator.
CORRELATION BENCHMARK INDICATOR.
KEEP TRACK OF THE CORRELATION OF DIFFERENT ASSETS.
It is easy to measure the correlation between a market and a benchmark with this indicator. The correlation coefficient has values between minus 1 and plus 1:
- For a value of +1, both data series are completely correlated
- The closer the value is to 0, the smaller the correlation
- With a value of -1, both data series are perfectly negatively correlated
Let us look at an example from practice. To this end, we first open a chart, e.g. The S&P 500 and then insert the indicator. As a benchmark, we define gold in the properties area. For period, we select 50. In order to visualize another correlation to the DAX in the same chart, we add the indicator again. The result is shown in the following figure: While the correlation of the S&P 500 and the DAX lingered over longer periods in the upper range, the gold price always presents itself as a counterpart to the US stock market. This was particularly strong, e. g. in summer and autumn 2013 with correlation values close to -1.