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Relative value |
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Relative valueThe attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or, for a given instrument, of one maturity relative to another.Relative value Similar MatchesRelative strength indexRelative strength indexA widely used index which compares a company's share price to a broadly-based market index like the FTSE All-Share. The point of the comparison is to show whether historically the company share price outperforms or underperforms the index.Because the RSI is a ratio, it will increase as a share moves higher relative to the market, and decrease as the share moves lower relative to the market. Its main use is to enable investors to avoid shares that have a history of relative underperformance and to chose those that have a history of relative outperformance.In commercial charts, the RSI is usually superimposed on the bottom third of the share price chart, or sometimes in its own box underneath the main chart. Relative strengthRelative strengthRelative strength compares the percentage gain in the price of a share to the percentage gain of a chosen index over the same period.An index is simply a weighted measure of a basket of shares. So if you were looking at the relative strength of Boots plc, you could compare its performance to:FTSE All-Share Index (the index for the whole London market)FTSE 100 (the index of the largest 100 companies on the London market by market capitalisation)FTSE Actuaries Industry sector index (this might look only at retailers, for instance)If a company's share price rises in any period by more than the comparative index, it is said to have positive relative strength. If it falls by more than the index falls, it has negative relative strength. Of course, just because a company has positive relative strength in one period or against one index, does not mean it will have positive relative strength over a future period or against a different index. Relative form of purchasing power parityRelative form of purchasing power parityTheory that the rate of change in the prices of products should be somewhat similar, but not absolutely the same when measured in a common currency, as long as transportation costs and trade barriers are unchanged. Relative demandRelative demandThe ratio of the demand for one good to the demand for another, most useful in representing general equilibrium in a two-good economy, where relative price adjusts to equate relative supply and relative demand. Relative priceRelative priceThe price of one thing (usually a good) in terms of another; i.e., the ratio of two prices. The relative of good X in terms of good Y is pX / pY. Further SuggestionsRelative yield spreadRelative strength Relative supply |
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