Chart of the Day - Plotting the StockRanks by Sector and Industry
One of the things I've always been aware of is that the StockRanks do tend to favour some sectors more than others. It's partly by their nature - the tendency to favour 'good, cheap, improving' shares means that more premium sectors (such as Healthcare) or speculative sectors (e.g. Oil E&P) will struggle to reach the heady heights of achieving a "99" StockRank. But I've never had a complete understanding of the spread across all sectors.
I've been recently brushing up on my data visualisation skills, so I thought I'd share a couple of interesting graphics on this topic. The following are called 'swarm plots' - they visualise all the shares on the UK Stock Market as dots, with the StockRank on the vertical axis, and the Sector on the horizontal.
The next chart shows the same data, but separated by "Business Sectors" - these are actually a level of the sector hierarchy we don't publish on the site, but they map to the above sectors sequentially so you can pretty much map them visually with the above chart.
You may struggle to see these images clearly - but you can normally 'right click' the image and choose 'Open Image in New Tab' - you'll see it in a lot more detail.
I can easily create some observations and insights from the above data... but I thought perhaps that pleasure could be all yours.
Please do add your comments below.
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18 comments
This is great but the display is distorted by the number of stocks in each sector. So financials look really good
Are we going this kind of chart 'live' in the future? At the moment they seem in the article a snapshot...
Those charts seem to be very interesting...
Will this feature be implemented in Stockopedia in the future?
Your observation regarding stocks in certain sectors not being able to reach Stock Ranks of 99 maybe applicable to stocks in a particular countries Stock Index. the rationale being institutional and retail investors tend to favour stocks which form apart of indices, hence these stocks are always in demand and as a result tend to have a lower Value Rank which in turn will impact their overall Stock Rank.
Quick question - what provides the horizontal spread within each X axis classification?
If I am looking for short term trades then I look for high SRs in strong sectors that have undergone a short term pull-back. Typically backed up with technicals - SlowStochastics with a short term setting (5,1) for %D and %K.
If I am investing I am either looking for the same as above; or will look for a mid-tier SR that is trending higher in a sector or industry group that is strengthening.
Ideally what I would like to see is visualisation that identifies the position of a candidate ('dot') within the universe of candidates (many 'dots'), and an animation of how they moved over time, say the last quarter or two.
To try and find 'hot' sectors I use momentum screen and restrict to top 10% & bottom 10% then divide them (for each sector) to create a ratio . High ratio means more of a sector's shares are in top 10% than bottom 10%. Healthcare is top at 85 and Energy is bottom with 30. I calculate them once / week to identify trends. I repeat this for industry groups (restricted to larger groups). I'd like to include business sectors but you don't publish them - but you have indicated you have this data so please publish! Any thoughts on my approach appreciated
Ed - Many thanks for the swift reply. Software/IT and Industrial Goods fair better in the 80-100 QM scoring than in the 80-100 QVMs, no doubt at a higher cost though.
Would also be interesting to know the % stocks in the 80 -100 QM and 80 -100 QVM range for each of the Industry groups as a guide to each industry group probable out-performance? (Would save me counting the dots!) Ian
I've always known the relative numbers in each sector, but seeing it visually like this is very eye opening. The original NAPS selected 2 from each sector - but seeing quite how few stocks there are in Utilities and Telecoms makes me wonder why I now even insist on having 1.
I am very interested in seeing which sectors / industries/shares are trending. It would be really helpful if there was something permanently on Stockopedia which shows this visually. Maybe there is but I haven't found it yet. If there is something please will you direct me to it.
Ed - Would be interested to see the same graphics analysed by QM, because I am not so sure the the V component in the QVM Stockrank is as helpful in predicting winners as it has been.
Here are the QM Charts
Unsurprisingly Technology and Consumer Defensives have a strong weighting towards higher QM. Vicious bell at the bottom in the Energy sector - deeply out of favour.
Look at Fossil Fuels below - very low QM. Unfortunately the below Industry classification isn't available in the screener at the moment.
This is excellent. Something Bill O'Neil & Minervini talk about is focusing on the strongest stocks in the stringest sectors - this helps to see instantly which sectors have clustering towards the top end. V.Useful
Hi Ed, it would be very useful if the above visual was clickable ie you could hover/click on each dot to see the name of the company.
Also, how do i see stockranks by sector?
You can either go to
You can use bubble charts on these pages too I believe.
Very good visuals, maybe as I am relatively new to Stockopedia, I may need some help interpreting for investment purpose.
At first glance you can see some extremes i.e. clustering and the obvious spread thereof (eg Financials) so stockpicking is vital in that area...confirmation of weak ranks in Utilities and Energy (no surprise) while like me, one has missed the top end of Basic Materials if you 'wrote off ' the sector due to the greater clustering at lower ranks.
Regarding financials (or banking and investment in the second chart), it does look like there is a spread, quite even actually, of stock ranks from the bottom to the top ranks. Also, I was not aware of the number of stocks in this sector, reflected by the number of dots, resulting in a broad column.
From the first chart the first column on the left in a pinkish colour , 'Basic Materials' looks like the same shape as the column 'Mineral Resources' in orange in the second chart. Does this mean that miners make up a lot of the Basic Materials sector as I always assumed? The dumbell appearance suggests that picking a miner to invest in without looking at the Stock Rank would get you one with a high or a low ranking, with only a smaller chance of getting a middle-ranking miner.
I find this a bit confusing - does an "Industry" (graph 2) sit within a "Sector" (graph 1) ?
I can't see that from this - suppose you add graph 2's "Applied Resources" to "Chemicals" columns you don't seem to get graph 1's "Basic Materials" column ?
Happy to be enlightened ......
Edit - great idea to look at data in a different dimension :-)