Classification of Stocks

Stocks can be classified into distinct groupings that allow us to compare stocks against their peers and we discuss these classifications. For example we might want to compare the performance of all stocks that have a large market capitalization, or those that have a small market capitalization. Stocks may be compared against their peers in the same industry/sector, as all stocks in an industry would experience a degree of correlation. Alternatively, stocks may be compared against their peers in the same geographic region or those stocks that have a comparable investment objective.