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What Does Outperform Mean in Stock Trading?
What does outperforming mean in the stock trading market? Read to learn what outperforming is and how to find assets that outperform the market.
Updated October 5, 2023.
Outperforming in stock trading generally refers to a stock that has performed better than the overall market returns. This can be measured by comparing the performance of an individual security relative to a benchmark index such as the S&P 500 or Dow Jones Industrial Average, which are frequently used as solid comparison points. If a stock performs better than the benchmark index over a given period of time, it is said to have outperformed the market.
Of course, outperforming can also refer to a stock that performs better than its peers within the same sector or industry. This can be measured by comparing the performance of an individual asset against other securities in their group, such as stocks in the same industry or index. In this case, it is said that the stock has outperformed the sector or industry.
So, if, for example, the US Tech 100 returned a total of 10% over the last year, but Microsoft (MSFT) returned 22%, then MSFT outperformed its peer stocks in the same index by 12%.
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Key Takeaway
In summary, outperforming in stock trading generally refers to a stock that has performed better than the overall market returns or relative to its peers within the same sector or industry.
Outperforming stocks tend to be highly sought after by investors who are looking for above-average returns, and they can often serve as reliable indicators of future performance. Therefore, it is important to be aware of which stocks are outperforming the market and pay close attention to their performance over time.
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