The rate of change is a measure of the speed at which a variable changes over time. With regard to a stock’s price, the rate of change can be calculated by dividing the current price of a stock by its value at a previous period in time, subtracting one and multiplying by 100.
For example, say the price of Stock A was $100 in January and dropped to $75 by March. The rate of change for Stock A’s price in this 3-month time period would be -25%.
The rate of change of an asset’s valuation allows for investors to understand the momentum of that stock’s value over a defined period of time.
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