Question

Value vs. Growth in Market Sectors.

I have weekly market capitalization of 10 different sectors and their weekly total returns (with included dividends).

Can I calculate if these sectors are value or growth using only their capitalization and total returns?

Answer 1

We can decide on the value or growth stocks by looking at the market capitalization and the returns exhibited by these stocks.

If the market capitalization is comparatively lower and the returns are robust, then these stocks can be classified as growth stocks since they have characteristics of high growth but lower market capitalization since business has not matured still.

On the other hand if the returns are still good and the market capitalization is also high, then these are value stocks since these are established businesses with stable market capitalization and returns are available from temporary mispricing in the market and value derived from stocks regressing towards their mean values.