Relative Strength

Relative strength is a momentum metric that compares the price performance of a stock (or sector) against a benchmark index or peer group over a specific time period. Unlike the Relative Strength Index (RSI), which is a bounded oscillator measuring overbought/oversold conditions, relative strength is a comparative ranking that identifies which stocks are outperforming or underperforming the broader market. Investors calculate relative strength by dividing the stock's price change by the benchmark's price change over the same period. Stocks with high relative strength are market leaders that tend to continue outperforming (momentum effect), while those with low relative strength are laggards. William O'Neil's CAN SLIM methodology uses relative strength as a core selection criterion, seeking stocks in the top 20% of relative performance. Many institutional investors use relative strength screens to tilt portfolios toward market leaders and away from deteriorating names.