Rebased charts: what two lines starting at 100 really show

What rebasing does to a series

Rebasing takes each series and rescales it so that its value on one chosen date equals 100. FRED's Index transformation does exactly this: the user selects the series, picks a date, and every line is set to 100 on that day. Every later point is then shown relative to that starting value.

The arithmetic is simple. If a line later reads 120, that series has grown 20% from its own starting point. If a second line on the same chart reads 110, that series has risen 10% from its own base. The scale on the side of the chart is no longer in dollars, tonnes, index points or people. It is in percentage change from a shared start.

That is the whole point of the tool. Data often comes in units that cannot sit on one axis. A price index, a wage series and a share price live on completely different scales. Plotted raw, one line would hug the bottom of the chart while another filled the frame. Rebased, they share a common language: growth since the start date.

What the gap between the lines does not say

The most common misreading is to treat the higher line as the bigger thing. A line at 120 sitting above a line at 110 does not mean the first series is bigger in absolute terms. It only means it has grown more since the base date. The first series could be tiny in real terms and the second enormous; rebasing hides that on purpose.

A simple way to picture it: two people start a savings habit on the same day. One begins with a small balance, the other with a large one. If the small balance grows faster, its rebased line will climb above the other. Nobody would conclude that the first saver now holds more money. The chart only answers the question of who grew faster, not who has more.

The same logic applies to markets. When a chart rebases a single stock and a broad index to 100, a stock line that ends higher has outperformed the index over that window. It says nothing about the company's size, its valuation or how much money moved through it. Size questions need the original units.

Why the start date matters so much

The base date is a choice, and it changes the picture. Every series is pinned to 100 on that single day, so whatever happened just before or just after that day shapes the whole chart.

Pick a start date right after one series has fallen sharply, and that series will look like a strong performer, because it is measured from a low point. Pick a start date just after the same series peaked, and it will look weak, because every later value is compared with a high. Nothing in the underlying data has changed. Only the reference point has.

This is why two honest charts of the same data can tell opposite stories. Each one is accurate about growth since its own base date. Neither is accurate about growth in general. A careful reader asks why that particular date was chosen and whether a slightly different date would flip the conclusion.

For chart readers, the habit is familiar. On a daily price chart, the window you look at changes what looks like a trend. A move that seems steep over a few weeks can look minor inside a longer range. Rebased charts carry the same risk, compressed into a single number at the start.

Two checks before reading meaning into a gap

The fix is not to avoid rebased charts. They are useful. The fix is to run two checks before reading the distance between lines as a real-world difference.

• Check the base date. Find the day on which every line equals 100 and ask what each series was doing around it. If one line starts from an unusual high or low, the gap that follows may mostly reflect that starting point.
• Check the original units. Look up what each series actually measures and in what unit. A wide gap in growth rates can sit alongside a small or irrelevant difference in real-world size, and the reverse is also true.

If both checks hold up, the chart is telling you something real about relative growth. If either one raises doubts, try moving the base date and see whether the story survives. A conclusion that changes when the start date shifts by a short period was never very strong.

How this applies to market charts

Traders meet rebased lines constantly, even when the chart does not label them that way. Performance comparison tools, fund factsheets and many charting platforms show several assets starting from the same point and spreading out over time. The visual is clean, and that is exactly why it deserves a second look.

Three practical habits help. First, read the vertical axis: if it is centred on 100 or shows percentage change, the chart is about growth, not level. Second, note the start of the window and compare it with a longer view of each asset. Third, when a rebased chart is used to argue that one asset is stronger, check it against each asset's own daily chart, where support, resistance, trend structure and moving averages are measured in the asset's real price.

A rebased comparison can show that one asset has outpaced another since a given day. It cannot show where either asset sits in its own range, whether its trend is rising or falling on its own terms, or how far it is from a level that has mattered before. Those questions belong to the individual chart.

What to keep in mind

Rebasing is a lens, not a verdict. It is the right tool when the question is how fast different things have grown from the same moment, especially when they are measured in different units. It is the wrong tool for comparing size, and it is sensitive to the date chosen as the anchor.

The risk is not in the data but in the reading. A gap that looks dramatic can come largely from where the lines were pinned. Treat the start date and the original units as part of the chart, not as fine print, and the picture becomes much harder to misread.