---
title: "Relative Strength Indicators"
description: "Indicators that compare one instrument or market against a benchmark or universe, measuring comparative performance rather than absolute price movement."
canonical: https://www.getswoopr.com/indicators/relative-strength/
source: "Swoopr Investment: https://www.getswoopr.com"
---

## Direct Answer



Indicators that compare one instrument or market against a benchmark or universe, measuring comparative performance rather than absolute price movement.





      


# Relative Strength Indicators



> Relative strength indicators compare one instrument with another instead of with its own past: a stock against its index, a sector against the market, small caps against large, growth against value, equal-weight against cap-weight, or any asset against a benchmark or peer group. They are ratios, their momentum, and their rank within a universe, and they are read to find leadership and rotation rather than absolute direction.

## What do Relative Strength indicators have in common?

Every indicator in this category is built from a ratio of two prices. Dividing a stock by its index removes the market's move and leaves the stock's own; dividing a sector by the market or one style by another isolates a rotation; dividing an equal-weight index by its cap-weight version measures whether the average member or the largest members are leading. The ratio is then treated like a price: its trend, its new highs, its momentum and its percentile rank are all read as they would be on a chart.

The category divides into three groups. Pair ratios (price relative, the relative strength line, stock against index, sector against market, peer and industry relative strength, benchmark relative return, relative performance ratio) compare one instrument with a benchmark. Thematic ratios (cyclical against defensive, growth against value, small cap against large cap, high beta against low volatility, equal-weight against cap-weight, risk-on against risk-off) compare two groups whose relative performance tracks the cycle or the appetite for risk. Rank and rotation measures (relative strength rank and percentile, momentum percentile rank, relative strength new high, ratio momentum, the relative rotation ratio and momentum, Mansfield relative strength) order a universe by its relative performance so that leaders and laggards can be selected.

What they share is independence from the market's direction: a stock can show rising relative strength in a falling market by falling less, which is the point. They also share the cross-sectional momentum evidence, since ranking by relative return over months and buying the leaders is the strategy Jegadeesh and Titman tested, and the same evidence warns that leadership reverses sharply when the market turns.

## How do you choose a Relative Strength indicator?

- Compare against the benchmark the position will be judged against; a sector fund's relative strength against the S&P 500 and against its sector peers answer different questions
- For leadership within a universe, use the rank or percentile measures over three to twelve months rather than a single ratio chart
- For the cycle, read the thematic ratios together: cyclical over defensive, small over large and high beta over low volatility tend to rise and fall as a group when risk appetite changes
- Use the relative rotation ratio and momentum as a pair to see whether a leader is still gaining or already fading, since a high ratio with falling momentum is the usual exit
- Confirm a relative strength new high with the absolute price; relative strength in a bear market can mean falling slowly

## Relative Strength indicators at a glance

| Indicator | What it measures | How it is read |
| --- | --- | --- |
| [Benchmark Relative Return](https://www.getswoopr.com/indicators/relative-strength/benchmark-relative-return/) | The return of an asset minus the return of a chosen benchmark over the same period, also called excess or active return. | A positive value means the asset beat the benchmark and a negative value means it lagged. |
| [Cyclical vs Defensive Ratio](https://www.getswoopr.com/indicators/relative-strength/cyclical-vs-defensive-ratio/) | The price of a basket of cyclical sector stocks divided by the price of a basket of defensive sector stocks, for example consumer discretionary relative to consumer staples. | A rising ratio means investors are favouring economically sensitive sectors over defensive ones, which is often linked to confidence in growth. |
| [Equal-Weight vs Cap-Weight Ratio](https://www.getswoopr.com/indicators/relative-strength/equal-weight-vs-cap-weight-ratio/) | The price of an equal-weight index or ETF divided by the price of its capitalisation-weighted counterpart, such as an equal-weight S&P 500 over the S&P 500. | A rising ratio means the average stock is outperforming the largest ones, and a falling ratio shows that mega-cap stocks are leading. |
| [Growth vs Value Ratio](https://www.getswoopr.com/indicators/relative-strength/growth-vs-value-ratio/) | The level of a growth style index divided by the level of the corresponding value style index, such as the Russell 1000 Growth over the Russell 1000 Value. | A rising ratio shows leadership by growth stocks and a falling one leadership by value stocks. |
| [High Beta vs Low Volatility Ratio](https://www.getswoopr.com/indicators/relative-strength/high-beta-vs-low-volatility-ratio/) | The level of a high-beta index divided by the level of a low-volatility index, for example the S&P 500 High Beta over the S&P 500 Low Volatility. | A rising ratio indicates investors are favouring risk and a falling ratio shows a preference for stability. |
| [Industry Relative Strength](https://www.getswoopr.com/indicators/relative-strength/industry-relative-strength/) | The performance of an industry group measured against a broad market index, usually as a ratio of the group's price index to the market index or as a rank of the group's return among all industries. | A rising ratio means the industry is outperforming the market and a falling ratio means it is lagging. |
| [Mansfield Relative Strength](https://www.getswoopr.com/indicators/relative-strength/mansfield-relative-strength/) | A form of relative strength associated with Stan Weinstein's stage analysis. | A positive value means the stock's relative strength is above its own long-term average, and a negative value means it is below. |
| [Momentum Percentile Rank](https://www.getswoopr.com/indicators/relative-strength/momentum-percentile-rank/) | The percentile position of a stock's momentum, commonly its 6- or 12-month return, within a universe of stocks. | High percentiles identify the strongest stocks by momentum and low percentiles the weakest. |
| [Peer Relative Strength](https://www.getswoopr.com/indicators/relative-strength/peer-relative-strength/) | The performance of a stock compared with a group of peers, such as companies in the same industry, commonly as the stock's price divided by an equal-weighted peer basket or as its return minus the peer-group return. | A value above 1 means the stock beat its peers over the period and below 1 means it lagged. |
| [Price Relative](https://www.getswoopr.com/indicators/relative-strength/price-relative/) | The price of a security divided by the price of a benchmark or another security, observed at the same time. | The absolute level has no meaning on its own; what matters is whether the ratio rises, meaning the security is gaining on the benchmark, or falls. |
| [Ratio Momentum](https://www.getswoopr.com/indicators/relative-strength/ratio-momentum/) | The rate of change of a relative strength ratio, such as a stock-to-index ratio, over a set number of periods. | A positive value means the asset has been gaining on the benchmark over the look-back and a negative value that it has been losing ground. |
| [Relative Performance Ratio](https://www.getswoopr.com/indicators/relative-strength/relative-performance-ratio/) | The cumulative return of an asset divided by the cumulative return of a benchmark, both measured from the same start date, so the ratio equals 1 at the start. | A value above 1 means the asset has outperformed since the start date and below 1 means it has underperformed. |
| [Relative Rotation Momentum](https://www.getswoopr.com/indicators/relative-strength/relative-rotation-momentum/) | The RS-Momentum axis of a Relative Rotation Graph, introduced by Julius de Kempenaer. | A value above 100 means relative strength is improving and below 100 that it is weakening. |
| [Relative Rotation Ratio](https://www.getswoopr.com/indicators/relative-strength/relative-rotation-ratio/) | The RS-Ratio axis of a Relative Rotation Graph, introduced by Julius de Kempenaer. | Above 100 means the asset is outperforming the benchmark in trend terms and below 100 that it is underperforming. |
| [Relative Strength Line](https://www.getswoopr.com/indicators/relative-strength/relative-strength-line/) | A line formed by dividing an asset's price by a benchmark's price on each date and plotting the result over time. | A rising line means the asset is outperforming the benchmark and a falling line means it is lagging; a flat line means the two are moving together. |
| [Relative Strength New High](https://www.getswoopr.com/indicators/relative-strength/relative-strength-new-high/) | A condition in which the relative strength line of an asset against a benchmark reaches a new high over a chosen look-back, commonly 52 weeks. | A new relative strength high means the asset is outperforming the benchmark by the widest margin in the look-back period. |
| [Relative Strength Percentile](https://www.getswoopr.com/indicators/relative-strength/relative-strength-percentile/) | The percentile position of an asset's relative performance, measured against a benchmark or by its return, among all assets in a universe, on a 0 to 100 or 1 to 99 scale. | High percentiles mark the strongest performers in the universe and low percentiles the weakest. |
| [Relative Strength Rank](https://www.getswoopr.com/indicators/relative-strength/relative-strength-rank/) | The ordinal position of an asset when a universe is sorted by relative strength, where 1 is the strongest. | A lower rank number means stronger relative strength. |
| [Risk-On vs Risk-Off Ratio](https://www.getswoopr.com/indicators/relative-strength/risk-on-vs-risk-off-ratio/) | The ratio of the price of a risk-seeking asset, such as a broad equity index, to the price of a safe-haven asset, such as long-dated Treasuries or gold. | A rising ratio shows investors favouring risk assets over safe havens and a falling ratio the reverse. |
| [Sector Relative Strength](https://www.getswoopr.com/indicators/relative-strength/sector-relative-strength/) | The performance of a market sector measured against the broad market, often by ranking the sectors by their return over a look-back period or comparing each sector's return with the market's. | A positive value shows the sector beating the market and a negative one lagging. |
| [Sector vs Market Ratio](https://www.getswoopr.com/indicators/relative-strength/sector-vs-market-ratio/) | The level of a sector index or ETF divided by the level of a broad market index, drawn as a line over time. | A rising ratio means the sector is outperforming the market and a falling ratio that it is lagging. |
| [Small-Cap vs Large-Cap Ratio](https://www.getswoopr.com/indicators/relative-strength/small-cap-vs-large-cap-ratio/) | The level of a small-cap index or ETF divided by the level of a large-cap index or ETF, such as the Russell 2000 over the S&P 500. | A rising ratio shows leadership by small caps, which is often linked to risk appetite and confidence in domestic growth; a falling ratio shows large caps in the lead. |
| [Stock vs Index Ratio](https://www.getswoopr.com/indicators/relative-strength/stock-vs-index-ratio/) | A single stock's price divided by the level of the index it belongs to, or a relevant market index. | A rising ratio means the stock is outperforming the index and a falling ratio means it is lagging. |

Each row is the opening sentence of that indicator's own definition and reading, so the table says exactly what the profile says.






## Guides in This Category



- [Comparative Relative Strength (RS)](https://www.getswoopr.com/indicators/relative-strength/comparative-relative-strength/)





## What limits do Relative Strength indicators share?

A ratio removes the market's move but not the benchmark's composition: the equal-weight against cap-weight ratio turns on a handful of mega-cap stocks, and a sector's relative strength depends on which index is chosen as the market. Relative strength says nothing about absolute return, so a leader in a falling market is still losing money. Rankings over months carry the momentum effect's documented crash risk when the market reverses, and the thematic ratios encode regime relationships (growth against value, high beta against low volatility) that have run in one direction for a decade before reversing.

## Frequently Asked Questions

What is relative strength in investing?

Relative strength is the performance of one instrument compared with another, usually a stock against its index or a sector against the market, measured as a ratio of their prices or a difference in their returns. A rising ratio means the instrument is outperforming the benchmark whether or not both are rising. It is distinct from the relative strength index, which compares a single instrument's gains with its own losses.

What is the equal-weight versus cap-weight ratio?

The ratio divides an equal-weighted version of an index by its capitalization-weighted version. When it rises, the average member is beating the largest members, which is read as broad participation; when it falls, a few large stocks are carrying the index. It is the price-based counterpart of the breadth indicators.

How is relative strength used to find sector rotation?

Each sector's price is divided by the market index and the ratio's trend and momentum are tracked; a sector whose ratio is rising and whose ratio momentum is positive is leading, one whose ratio is still high but whose momentum has turned is weakening. The relative rotation ratio and momentum formalize this into a four-phase cycle of leading, weakening, lagging and improving.


      



[Swoopr Editorial Team](https://www.getswoopr.com/authors/swoopr-editorial-team/) produces independent investment education and research content.



Corrections: [corrections policy](https://www.getswoopr.com/legal/corrections-policy/). Standards: [editorial standards](https://www.getswoopr.com/legal/editorial-policy/).