Momentum is one of the most studied patterns in finance: across shares, sectors, countries and commodities, recent winners over 3 to 12 months have tended to keep outperforming recent losers over the following months, though with occasional sharp reversals.
Relative strength compares one asset's return with another's or with a benchmark.
Why it matters
Explanations include investors under-reacting to news and then chasing it. Top-down investors use relative strength to find the sectors and markets where the economic theme is already showing up in prices.
On FinVolio
The Leaders and laggards table on the markets page ranks every market by its three-month return.
General information, not advice.