Sector Analysis is a top-down approach to determine the sectors and the investments in those sectors that have the potential to perform better in the near or distant future. This visualisation shows the sector performance relative to any asset such as an index like S&P500. Any asset ticker can be selected from the primary axis and its performance can be measured against the sector that the asset belongs to or relative to another sector.

A sector can be represented by an ETF or Index in the different exchanges across the globe. The visualisation, by default, shows the sector ETFs for the US market. However, other indexes or ETFs that represent sectors in other markets, such as Australia and India, can also be selected from the secondary index. 

Key Takeaways

Certain sectors of the economy perform better relative to other sectors at different stages of the business cycle and identifying these sectors can help them find profitable investments. This approach, combined with actively rotating investments into the trending sectors based on the current position in the market cycle, can be a potentially profitable investment strategy.