# Calculate relative performance in python on daily stock price data

When working with daily stock price data, it is often necessary to calculate the relative performance of a stock. This can be done in various ways using Python. In this article, we will explore three different approaches to solve this problem.

## Approach 1: Using Percentage Change

One way to calculate relative performance is by using the percentage change formula. This formula calculates the percentage change between two consecutive data points. Here’s how you can implement this approach:

``````
# Sample code
import pandas as pd

# Load the stock price data into a DataFrame

# Calculate the percentage change
data['Relative Performance'] = data['Close'].pct_change() * 100

# Print the result
print(data['Relative Performance'])
``````

This approach calculates the relative performance as the percentage change between consecutive closing prices. However, it does not take into account any other factors that may affect the stock’s performance.

## Approach 2: Using Log Returns

Another way to calculate relative performance is by using log returns. Log returns are calculated by taking the natural logarithm of the ratio between two consecutive data points. Here’s how you can implement this approach:

``````
# Sample code
import pandas as pd
import numpy as np

# Load the stock price data into a DataFrame

# Calculate the log returns
data['Relative Performance'] = np.log(data['Close'] / data['Close'].shift(1))

# Print the result
print(data['Relative Performance'])
``````

This approach calculates the relative performance as the log returns between consecutive closing prices. Log returns are often preferred over percentage change as they are additive and have desirable statistical properties.

## Approach 3: Using Rolling Window

A third approach to calculate relative performance is by using a rolling window. This involves calculating the relative performance over a specified window of time. Here’s how you can implement this approach:

``````
# Sample code
import pandas as pd

# Load the stock price data into a DataFrame

# Set the rolling window size
window_size = 5

# Calculate the relative performance using a rolling window
data['Relative Performance'] = data['Close'].rolling(window_size).apply(lambda x: (x[-1] - x[0]) / x[0] * 100)

# Print the result
print(data['Relative Performance'])
``````

This approach calculates the relative performance as the percentage change over a rolling window of closing prices. It provides a more smoothed out view of the stock’s performance over time.

After evaluating these three approaches, it can be concluded that the second approach, using log returns, is the better option. Log returns are widely used in finance and have desirable statistical properties. They provide a more accurate representation of the stock’s performance compared to the other two approaches.

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### 17 Responses

1. Sasha says:

Approach 3 seems interesting, but can we really trust the accuracy of rolling windows? 🤔

2. Everleigh Velez says:

Approach 2 sounds interesting but I wonder how it compares to Approach 1 and 3. 🤔

3. Peyton Booth says:

Approach 2 seems more accurate to me, but approach 3 sounds intriguing. What do you guys think? #stockmarket

4. Nixon says:

Approach 2 with log returns seems more math-y and fancy, but is it really necessary? 🤔

5. Emanuel says:

Approach 3 seems complex, but maybe its worth it for more accurate results. Thoughts?

6. Elodie Moran says:

Approach 3 seems more robust, but does it account for sudden market changes? 🤔

7. Aspen Fuentes says:

Approach 2 sounds fancy, but does it really give better results than Approach 1? 🤔

8. Reese Clay says:

Approach 3 seems tedious, but could yield more accurate results. What do you guys think?

9. Carla says:

Approach 2 seems cool, but can we trust log returns to accurately measure performance?

10. Vivienne Salas says:

I personally think Approach 2 (Using Log Returns) gives more accurate results. What do you guys think?

1. Chance Murillo says:

I disagree. Approach 1 (Using Simple Returns) is simpler and easier to understand. Accuracy is subjective and both methods have their merits. It ultimately depends on the specific context and preferences. What matters is choosing the approach that suits your needs.

11. Kairi York says:

Approach 3: Using Rolling Window seems like a rollercoaster ride. Anyone up for the thrill? 🎢

12. Melany says:

Approach 2 seems more accurate for calculating stock performance. Log returns FTW! 📈🚀

13. Savannah Pope says:

Approach 1 seems more intuitive, but I wonder if Approach 3 provides more accurate results? 🤔

14. Henry says:

Approach 2 seems like a math wizards dream, but is it practical for everyday investors? 🤔

15. Cairo says:

Who knew calculating stock performance could be so interesting? Loving Approach 2 with log returns! 📈

1. Bristol Moody says:

I couldnt agree more! Approach 2 with log returns is a game-changer. Its refreshing to see a different take on calculating stock performance. Now, lets hope it translates into actual gains in the market! 🤞🏼