The value of sampling
Jul 28, 2005
In a previous post, I talked about "wasted motion" in stock return charts. This wastage is another form of embarrassment of riches: a graphic should not be merely a container of data; a good graphics designer removes redundant data that do not amplify her message.
Sampling is one useful technique. On the right I created three stock return charts displaying the same data. The top one plots daily stock returns, following the NYT example. The bottom two charts plot monthly and quarterly stock returns for the same period. In essence, they show smaller portions (samples) of the data from the first chart.
The NYT article was concerned with growth stocks (Intel, Cisco) versus value stocks (GE, Pfizer). The data point out that value stocks outperformed growth stock during the period up to July 17 2005 but both groups of stock underperformed the S&P market index. The key features, then, should have been the end-of-period returns, followed by general trends.
The quarterly (or monthly) chart brings this message out much more clearly because it contains less clutter. The end-of-period returns and the trends show up on all three charts.
The astute reader will notice that I moved the axis to the right side of the graph because the end-of-period return is the key feature (the beginning-of-period return is zero for everything). Also, color-coding the two groups of stocks and the S&P index helps bring out the message. The start-of-period date should be annotated (which I haven't done here); in a later post, we will explore its importance. A time axis is optional; if present, include a small number of ticks, say half-yearly.
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