A Guide to Outperform the Market
What Is Relative Strength?
Relative strength is an investment strategy used in momentum investing to identify securities that outperform the market or a chosen benchmark. By comparing the performance of an asset, such as a stock or sector, to an index like the S&P 500 or Nasdaq Composite, investors can target those demonstrating stronger upward momentum.
This approach can be applied across various markets and asset classes, helping investors focus on assets likely to continue outperforming. While relative strength strategies can offer potential rewards by capitalizing on market trends, they also carry risks if momentum shifts suddenly. Technical analysts often complement this strategy with the relative strength index (RSI), an…
