ATLASSector
Investing glossary · Markets and instruments
A broad group of companies in similar lines of business, such as technology, healthcare or energy.
Definition
A sector is a broad category of the economy: technology, financials, healthcare, energy, consumer goods and so on. Within a sector, an industry is a narrower line of business, for example semiconductors inside technology. Classification systems such as GICS standardize these groups.
Sectors matter for risk. Companies in the same sector often respond to the same forces, such as interest rates for banks or oil prices for energy, so they tend to move together. A portfolio concentrated in one sector is less diversified than the number of stocks suggests, and comparing valuation ratios makes most sense within a sector.
Worked example
Apple (AAPL) is classified in the Technology sector, in the Consumer Electronics industry. Comparable companies in its line of business include Sony Group, Sonos, GoPro.
Valuation ratios like P/E are most meaningful when compared with these peers rather than with the whole market.
How ATLAS uses it
Every ATLAS stock page shows its sector, industry and comparable companies, and browsing by sector is a way to find alternatives to a stock.
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The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
What is the difference between a sector and an industry?
A sector is the broad category; an industry is a more specific line of business within it.
Why should I watch sector concentration?
Because stocks in one sector tend to move together, so a concentrated portfolio is more exposed to a sector-wide shock than it appears.
Related terms
Put the idea to work on your own stocks
Open any company in ATLAS to see its fair value, its odds of rising and its risk numbers side by side.
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