The Stockcharts.com ChartSchool says: "When a PerfChart has a baseline, the performance of the baseline symbol is subtracted
from the performance of all of the other symbols. This shows each symbol's performance relative to the performance of the baseline symbol." My proposal is for StockCharts to add the ability to plot relative performance as a ratio
, rather than a difference.
Here's the motivation.Charting relative performance as a difference can be misleading.
For example, click "VTI" on the following PerfChart
. Stretch the left end of the bottom slider back and forth between 2002 & 2007. You'll see that for a slider start date of 2002, VXF appears to *outperform* VTI between 2009-2019. But for a slider start date of 2007, VXF appears to *underperform* VTI over the same time period (2009-2019)!
This inconsistency (and dependence on the reference start date) illustrates why the relative performance is probably more aptly computed as a ratio
, not a difference. For example, see the "telltale chart"
of former Vanguard CEO John Bogle. For ticker symbols A & B with starting values A0 & B0, the Bogle chart shows (B/B0)/(A/A0) = B/A * A0/B0. Comparing two dates, again using a ratio, would give (B2/A2*A0/B0) / (B1/A1*A0/B0) = (B2/A2) / (B1/A1). This is exactly what we mean by relative performance, which is appropriately independent of the arbitrary reference start values A0 & B0.
In contrast, as I understand it the PerfChart currently shows B/B0 - A/A0 = (A/A0) * [(B/B0)/(A/A0) - 1] = (A/A0) * (BogleChart - 1). So the Perfchart amplifies the actual relative performance by A/A0
, the amount that A has grown since the arbitrary slider start date. This is not desirable. Comparing two dates on the PerfChart, using a ratio, would give A2/A1 * (BogleChart2 - 1) / (Boglechart1 - 1), which scales the true relative performance by the performance of A. Alternatively, comparing two dates on the PerfChart using a difference would give (B2/B0 - A2/A0) - (B1/B0 - A1/A0) = (B2-B1)/B0 - (A2-A1)/A0. So a small arbitrary B0 would amplify the apparent subsequent performance of B, while a small arbitrary A0 would amplify apparent subsequent performance of A. This is why the slopes on the relative PerfChart, as currently implemented, depend so wildly on the starting date of the slider.
In short, I'd request either correcting the PerfChart to show a true Bogle-type chart of relative performance as a ratio
, or at least adding a feature to do this. Again, this would be simply: 100% * [(B/B0)/(A/A0) - 1]. Would others like to see this as well?
Thanks for any help or support you can offer. (I'm a new member seeking help on SCAN, after receiving no response from Stockcharts.com for a few weeks.)