Direct Answer
Relative comparison charts are a family of four related methods, relative performance, indexed-to-100, percent-change, and ratio charts, for comparing two or more assets that trade at different absolute prices on a single chart. Rather than plotting raw dollar prices (where a $500 stock's line would dwarf a $50 stock's, regardless of which one actually performed better), each method rescales the data to a common, comparable baseline.
Key Takeaways
- Raw prices from differently priced assets can't be usefully plotted together, a $500 stock's small moves would visually swamp a $50 stock's line even if the $50 stock gained more in percentage terms.
- A relative performance chart (also called a percent-change chart, the two names describe the same construction) plots each asset's cumulative percent change from a common start date, so all lines begin at 0%.
- An indexed-to-100 chart is mathematically equivalent to a relative performance chart, it just rebases the start value to 100 instead of 0%, so a 12% gain reads as 112 instead of +12%.
- A ratio chart divides one asset's price by another's into a single line; a rising line means the numerator is outperforming the denominator, a falling line means the reverse.
- Relative performance and indexed-to-100 charts can show any number of assets at once; a ratio chart is a single line limited to comparing exactly two assets.
What Are Relative Comparison Charts?
Relative comparison charts solve a specific charting problem: comparing two or more assets with different absolute prices on one chart. Plotting raw prices together, say, a $50 stock next to a $500 stock, would be visually meaningless, since the $500 stock's ordinary day-to-day fluctuations would dominate the chart's scale and make the $50 stock's line look nearly flat by comparison, regardless of which asset actually delivered the better return.
Four related methods address this, and the names are commonly used interchangeably for the same underlying construction:
- Relative Performance Chart / Percent-Change Chart, plots each asset's cumulative percentage change from a common starting date, so all assets start at 0% and diverge from there based on relative performance. These two names are commonly used for the same underlying construction.
- Indexed-to-100 Chart, rebases each asset's price so it starts at a value of 100 on a chosen start date, letting the assets be compared visually on the same numeric scale from that point forward. It's mathematically equivalent to a percent-change chart, just displayed as an index value instead of a percentage.
- Ratio Chart, plots one asset's price divided by another asset's price as a single line. A rising ratio line means the numerator asset is outperforming the denominator asset; a falling line means the opposite. It's a single-line way to visualize relative strength between exactly two assets.
How Each One Is Built
Relative performance / percent-change
Pick a common start date. For each asset, calculate the percentage change of every subsequent closing price relative to that start-date price. The result is a line for each asset that begins at 0% on the start date and moves up or down from there as that asset's price changes, with every asset expressed in the same unit (percent), regardless of its actual dollar price.
Indexed-to-100
Same underlying calculation, displayed differently: instead of expressing change as a percentage starting at 0%, each asset's price is rebased to start at an index value of 100 on the chosen date. A price that's up 12% since the start date shows as 112; a price that's down 8% shows as 92. Because it's the same math with a different display convention, an indexed-to-100 chart and a relative performance chart of the same assets over the same period will always show identically shaped lines.
Ratio
Divide one asset's price by another asset's price at each point in time, producing a single line rather than one line per asset. Unlike the other two methods, a ratio chart isn't anchored to percentage change from a start date, it's simply the numerator's price divided by the denominator's price at every point, so its absolute level depends on which asset is the numerator and which is the denominator.
How It Looks: A Worked Example
Hypothetical example, for education only.
Two hypothetical stocks, Asset A (starting at $50) and Asset B (starting at $500), over four illustrative periods:
| Date | Asset A price | Asset B price | A relative performance | B relative performance | Ratio (A ÷ B) |
|---|---|---|---|---|---|
| Start | $50.00 | $500.00 | 0% (indexed: 100) | 0% (indexed: 100) | 0.1000 |
| Period 2 | $55.00 | $520.00 | +10.0% (indexed: 110.0) | +4.0% (indexed: 104.0) | 0.1058 |
| Period 3 | $52.50 | $540.00 | +5.0% (indexed: 105.0) | +8.0% (indexed: 108.0) | 0.0972 |
| Period 4 | $60.00 | $550.00 | +20.0% (indexed: 120.0) | +10.0% (indexed: 110.0) | 0.1091 |
On a raw-price chart, Asset B's line (moving in $10-$20 increments) would visually dominate Asset A's line (moving in $2-$5 increments) even though Asset A is the better performer throughout. On a relative performance or indexed-to-100 chart, both lines start together and it's immediately clear Asset A pulls ahead by Period 4 (+20% vs. +10%), dips relatively behind at Period 3 (+5% vs. +8%), and finishes on top. The ratio line (A ÷ B) tells the same outperformance/underperformance story as a single line: it rises when A is gaining on B (Period 2, Period 4) and falls when A is losing ground to B (Period 3), with no need to track two separate lines at all.
How Traders Use These Charts
Comparing a stock to a benchmark or sector
A common use is plotting a stock alongside a benchmark index or sector ETF on a relative performance or indexed-to-100 chart to see, over the chosen window, whether the stock is outperforming or lagging the broader market, a comparison a raw-price overlay generally can't show cleanly when the price levels differ.
Relative strength between two assets
A ratio chart is commonly used to track whether one asset is persistently gaining or losing ground against another, for example, a sector ETF divided by a broad-market index, to see whether that sector is in relative favor. A rising ratio doesn't mean the numerator asset's price is rising in absolute terms, only that it's outperforming the denominator; the two can diverge from each other even during a broad market decline.
Comparing multiple assets at once
Because relative performance and indexed-to-100 charts can hold any number of lines, they're commonly used to compare several stocks, sectors, or asset classes against each other and against a benchmark over the same window, in a way a ratio chart, limited to two assets at a time, can't.
None of these readings are a signal that guarantees future results; they describe historical relative performance over the window shown, and that relationship can and does change going forward.
Limitations and Common Mistakes
- Start-date sensitivity, a relative performance or indexed-to-100 chart's entire shape depends on the chosen start date. Pick a different start date and the same two assets can show a completely different-looking relationship, even though the underlying prices haven't changed.
- Ratio charts hide absolute direction, a rising ratio line only says the numerator is outperforming the denominator; it says nothing about whether either asset is actually up or down in price. Traders sometimes misread a rising ratio as "the numerator is going up," which isn't what the chart shows.
- Indexed-to-100 numbers aren't prices, reading an indexed value like 112 as if it were a dollar price rather than "12% above the start-date level" is a common misinterpretation, especially when the chart is glanced at quickly.
- Dividends, splits, and corporate actions, whether a relative comparison chart uses adjusted or unadjusted prices affects the result, and mixing an adjusted series with an unadjusted one produces a misleading comparison.
- Not a forecast, all four methods describe historical relative performance over the specific window displayed; they don't predict which asset will outperform going forward.
The Start Date Decides the Story
For every method here except the ratio chart, the shape of the result is determined by where you started measuring. Two assets rebased from January and the same two rebased from March can produce opposite-looking pictures from identical underlying prices. That is not a flaw to correct; it is what a cumulative comparison does. It does mean that any relative performance chart is an argument, and the start date is its main premise.
The defence is to state the start date wherever the chart travels, and to check the comparison from a second starting point before treating a conclusion as robust. If the story survives both, it is about the assets. If it flips, it was about the calendar.
The ratio chart avoids that particular problem and introduces another. It has no start date to argue about, and it also hides absolute direction entirely. A rising ratio line means the numerator is beating the denominator, which is compatible with both assets falling. Reading a rising line as the numerator going up is the most common error this family produces.
Two smaller points. Indexed values are not prices, so a reading of 112 means twelve percent above the start level rather than a dollar figure. And whether the underlying series adjust for dividends, splits and other corporate actions changes the comparison materially, so a relative chart is only as consistent as the data feed behind it.
Relative Comparison Chart FAQs
What is a relative performance chart?
A relative performance chart plots each asset's cumulative percentage change from a common starting date, so every line begins at 0% on that date and diverges afterward based on how each asset actually performed. It's also commonly called a percent-change chart, the two names refer to the same underlying construction.
What's the difference between a relative performance chart and an indexed-to-100 chart?
Mathematically they're equivalent. A relative performance chart shows cumulative percentage change starting at 0%, while an indexed-to-100 chart rebases each asset's price to start at a value of 100 on the same date. The shapes of the lines and the relative spacing between assets are identical, only the displayed number differs (a 12% gain reads as +12% on one and 112 on the other).
How is a ratio chart different from a relative performance chart?
A relative performance or indexed-to-100 chart can show any number of assets as separate lines, each anchored to the same start date. A ratio chart instead divides one asset's price by another's to produce a single line, so it only works for comparing exactly two assets at a time and isn't anchored to a particular start date the way the other two methods are.
Why can't you just plot two stocks' raw prices on the same chart?
Plotting raw prices together is visually meaningless when the assets trade at very different absolute levels, a $50 stock next to a $500 stock would show the higher-priced stock's every small move dwarfing the lower-priced stock's line, even if the lower-priced stock actually gained more in percentage terms. Relative performance, indexed-to-100, and ratio charts remove the price-level difference so the comparison reflects relative performance instead.
Does a rising ratio line mean the numerator asset is going up in price?
No. A rising ratio line means the numerator asset is outperforming the denominator asset, it can rise even while both assets fall, as long as the numerator falls less. A falling ratio line means the numerator is underperforming the denominator, again regardless of each asset's individual direction.
Can more than two assets be compared on one relative chart?
Yes, with a relative performance chart or an indexed-to-100 chart, any number of assets can each be plotted as their own line from the same starting date. A ratio chart is different: because it's built from one price divided by another, it's a single line that only compares exactly two assets at a time.
Should relative comparison charts use total return series?
For assets with materially different distribution yields, a price-only comparison attributes a systematic difference to relative performance when it is actually income being paid out. A high-yielding asset compared on price against a low-yielding one will look progressively weaker for that reason alone. Using total return for both removes the effect. The requirement is consistency: both legs on the same basis, whichever is chosen.
How do currencies affect a cross-market relative chart?
Comparing two assets quoted in different currencies puts the exchange rate inside the ratio, so the line records the currency move as well as the relative performance. A domestic index compared against a foreign one can appear to be trending purely because the pair moved. Converting both series to a single base currency first isolates the comparison, and the choice of base then belongs in the chart description.
What does a logarithmic scale do on a ratio chart?
It makes equal proportional moves occupy equal vertical distance, so a doubling of the ratio and a halving of it look symmetric. On a linear scale the doubling appears far larger, because the ratio is bounded below by zero and unbounded above. Since a ratio chart is read for proportional change rather than absolute level, the logarithmic scale is usually the more faithful presentation.