Here’s a Quick Way to Improve Your Charts
In a recent BusinessWeek article, the chart below was show to visualize the difference between Q2 ’08 and Q2 ’09. Looking at the chart, a reader can do a pretty good job at seeing the difference between Q2 from one year to the next. Logically, the more recent value is on the right and in green with the older value on the left in black. There is a bit of highlighting in gray done to illustrate the overall S&P500 value and change from year to year. So far so good, right?
One question that I often ask myself when performing a year over year or period over period analysis, is if the values really matter or just the change. Sometimes the values for Q2 of this year and last year are important and sometimes only the change matters. A good example of when the values do matter is typically when showing market value changes. It’s often important to know where a company falls in the overall market as well as how they are trending or changing over time. Many times showing the values will make the most sense and give the reader a full picture.
On the other hand, sometimes the total values don’t matter as much and you just need to highlight the changes. In this scenario, it’s often cleaner and more effective to simply show the change from year to year as a percentage or value. This removes the extra data series and also gives a clear picture of the change where the graph below does not. For example, can you tell if the year-over-year change for Information Technology is the same as Energy in the chart below?
[Source]
Now, if only the change was shown, the values would be both positive and negative. You could then sort in descending order to see which sectors did the best and those that did the worst. I often see charts like the one above, which are well designed. I rarely see a chart with only the change. To meet somewhere in the middle, I see charts like the one here, but with the percent change as a label for each sector.
Below the chart in BusinessWeek appeared this text:
“Profit margins at health-care, utility, consumer staples, and consumer discretionary companies have actually improved in the past year.”
By only showing the change in descending order, the sectors highlighted by the above text, would be much easier to see and would include change amounts. One other note – I think the wider gap between Materials and Telecom is just an oversight.
What do you think – show only the change, show the values or show both the values and change?
September 4th, 2009 at 8:13 am
Naturally it depends on the purpose of the chart. At first I was thinking a panel chart based on the above with another panel showing % change.
But a viable alternative is a scatter chart with latest time period value on one axis and % change on the other.
September 4th, 2009 at 2:29 pm
And perhaps it isn’t even the % change that would be instructive to sort by but the absolute change in $… i.e. if Energy is 100 times larger an industry than Information Technology a 1% difference means a lot more.
I’d also look at a series of horizontal lines connecting Q2 2008 to Q2 2009 for each of the industries with a simple label next to the points. Thus one could see the % value for each year (and they’d be visually ranked for each year) and the slope would show the change.
If change is most important though your sorted chart of Q2_2009 minus Q2_2008 would work well.
September 4th, 2009 at 3:04 pm
Scott – thanks for leaving a comment and welcome to the blog! You make a good point about the absolute change. Yeah, the horizontal lines is a good suggestion too, but may be cluttered if the values are close to each other. I would have to model it. I wish it were easier to get the data set to some of the graphs I see in periodicals. Thanks again!
September 4th, 2009 at 3:07 pm
Jon – thanks for dropping by! I like your idea of the scatter chart. Maybe, if I have some free time, I will try to recreate the chart using that method. Have a great weekend!