A stock that gained 15% sounds like a win, until you find out the market gained 20%. Raw returns can't tell you whether you're actually ahead. A relative performance chart can, because it puts a stock next to a benchmark and shows who is pulling ahead. This guide shows how to build and read one, using real sector returns from a full calendar year as the worked example.
Quick answer: Relative performance is a stock's return minus its benchmark's return, in percentage points. Chart both from the same start date. If the gap widens, the stock is leading. If it narrows, the lead is fading.
What is a relative performance chart?
A relative performance chart compares one security against another, usually a stock against a benchmark such as SPY or against its closest peers. You'll see it in two common forms:
Rebased lines. Every line starts at 0% on the first day of the window, so the vertical gap between two lines is the performance difference.
A ratio line. The stock's price divided by the benchmark's price. When the line rises, the stock is beating the benchmark. When it falls, the stock is lagging. The line says nothing about whether the stock's own price is up or down.
The basic math is simple. Relative performance is the stock's return minus the benchmark's return, in percentage points. If a stock returns 15% and the benchmark returns 20%, the stock trails by 5 percentage points even though it made money.
Odin500's relative performance page works this way. It plots a stock against the S&P 500, QQQ or DIA and lists the difference in percentage points for every period from one day to 20 years.
One warning about names: "relative strength" in this sense has nothing to do with the RSI indicator. RSI is a momentum oscillator built from one security's own gains and losses. Relative strength compares two securities.
How to use relative performance charts in four steps
1. Pick the right benchmark
SPY is the usual starting point for large U.S. stocks. For growth stocks, QQQ may be a fairer yardstick. To find out whether a stock's move is its own or its industry's, compare it with a sector ETF. A chip stock that beats SPY but trails a semiconductor ETF has only kept pace with its industry. The sector did the work.
Remember what's inside the benchmark, too. SPY is weighted by market value and leans on technology, so it often moves with tech more than with the average stock. When tech is surging, it's a hard bar for other sectors to clear. When tech is sagging, it's an easy one. An equal-weight fund such as RSP, which the Odin500 market dashboard lists under other U.S. index ETFs, gives you a second opinion.
2. Choose a window and use the same start for everything
Every line needs the same start date, or the comparison is meaningless. Then check more than one window. A short window such as one month shows new momentum, and a long window such as six or twelve months shows the established trend. A sector can be up 20% over a year and down 5% over a month at the same time, and that disagreement is often the most useful signal on the chart.
You can practice on the market dashboard, which plots selected series such as SPY, QQQ, DIA and XLK from the same 0% baseline over a window you pick. Each sector page, such as Technology (XLK), lists the difference versus the S&P 500 from one month to 20 years, so you can compare windows side by side.
3. Read the gap and the slope
The gap tells you how far ahead or behind a stock is. The slope tells you whether that gap is growing or shrinking. A stock can still lead while its ratio line turns down, an early sign the lead is fading.
4. Turn it into an idea, then check it
Relative strength is a lead, not a verdict. Ask what drove it, whether it came with extra risk, and whether the trend is still intact. The market movers page is a good place to look for the news behind a big move.
A real example: sector returns in 2025
To show the method, here are 2025 calendar-year total returns, with dividends reinvested, for SPY and six of the eleven Select Sector SPDR ETFs. A closed year never changes, so you can check every number yourself.
Sector | ETF | 2025 return | vs. SPY (points) |
|---|---|---|---|
Technology | XLK | +24.61% | +6.89 |
Utilities | XLU | +16.02% | -1.70 |
Financials | XLF | +14.90% | -2.82 |
Health Care | XLV | +14.50% | -3.22 |
Energy | XLE | +7.88% | -9.84 |
Consumer Staples | XLP | +1.52% | -16.20 |
SPY returned 17.72% that year. Only one of the six sectors, technology, beat it. Consumer staples made money but trailed by 16.2 points. That's the point of the chart: a positive return and a win aren't the same thing.
The same data can be told two ways. Technology beat SPY by 6.89 percentage points, but its ratio to SPY rose 5.9% (1.2461 divided by 1.1772), because the ratio compares growth rates instead of subtracting them. Both are valid. Just don't mix them in the same sentence.
Now change the window. Here's how two of those sectors stacked up against SPY in other years.
Year | SPY | Technology vs. SPY (points) | Energy vs. SPY (points) |
|---|---|---|---|
2022 | -18.18% | -9.6 | +82.5 |
2023 | +26.18% | +29.8 | -26.8 |
2024 | +24.89% | -3.3 | -19.3 |
2025 | +17.72% | +6.9 | -9.8 |
Energy trailed SPY in three of those four years, then 2022 happened. Technology flipped between leading and lagging. One window would have told you a very different story from the next, which is why you should always check more than one. You can explore any of these groups further on Odin500's sector data pages, including Energy (XLE), or compare them across horizons in the return table.
From relative strength to rotation ideas and alpha
Rotation. Compare a short window with a long one. A sector that is weak over six months but improving over one month may be emerging as a new leader. A sector that is strong over six months but fading over one month may be handing off leadership. Our guide to sector rotation explains the cycle in more detail. The stock market heatmap is a quick way to see which sectors and stocks are behind those moves, and our guide on how to read a stock heatmap shows how.
Alpha. Informally, alpha is the return a stock earns above its benchmark. Strictly, it adjusts for risk, so a stock that beats SPY by 10 points while swinging twice as hard hasn't necessarily produced alpha. Check volatility and drawdowns alongside the relative return.
Peers. Compare a stock with its sector ETF as well as SPY. If it beats both, the strength is stock-specific. If it only beats SPY, the sector may deserve the credit. Our look at technology sector performance digs into what drives one sector.
Mistakes to avoid
Cherry-picking the start date. Shifting the window can flip the result. Energy went from 82.5 points ahead of SPY in 2022 to 26.8 points behind in 2023.
Using the wrong benchmark. A utility stock measured against a tech-heavy index looks worse than it is.
Ignoring dividends. Price-only returns understate income-heavy sectors such as utilities and energy. The 2025 table uses total returns for that reason. Check which one your tool shows.
Mixing points and percent. A 6.9-point lead and a 5.9% ratio gain describe the same thing. Pick one per sentence.
Treating relative strength as a forecast. It describes what happened. It doesn't promise what comes next.
Try it yourself
Pick a stock you own or follow, open its relative performance page, and read the gap and the slope in two windows. When you want to test an idea without risking money, try a virtual portfolio and use the compare page to line it up against others.
Key takeaways
Relative performance is a stock's return minus its benchmark's return, in percentage points.
A rising ratio line means outperformance, regardless of whether the price itself is rising.
Check at least two windows, and use the same start date for every line.
Compare with both SPY and a sector ETF to see whether strength belongs to the stock or its industry.
Relative strength is a starting point for research, not a buy or sell signal.
Frequently asked questions
What is a relative performance chart?
It's a chart that compares how one security performs against another, such as a stock against SPY. It shows whether the stock is outperforming or lagging, and by how much.
How do you calculate relative performance?
Subtract the benchmark's return from the stock's return over the same period. A stock up 12% when the benchmark is up 8% has a relative performance of +4 percentage points.
Is relative strength the same as RSI?
No. RSI measures a single security's momentum from its own gains and losses. Relative strength compares two securities by dividing one price by the other.
What is a good benchmark for a relative performance chart?
For large U.S. stocks, SPY or the S&P 500 is the usual choice. Use QQQ for growth stocks, and a sector ETF when you want to know whether the stock or its industry deserves the credit.
Does relative performance include dividends?
It depends on the data. Price-only charts leave dividends out, while total return charts include them. Check which one your tool uses, especially for income-heavy sectors such as utilities.
This article is for educational purposes only and is not investment advice. Return figures are calendar-year total returns with dividends reinvested, from Total Real Returns, and may differ slightly from other data providers.