{"id":33147,"date":"2021-10-05T18:58:31","date_gmt":"2021-10-05T18:58:31","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=33147"},"modified":"2025-09-26T06:47:52","modified_gmt":"2025-09-26T06:47:52","slug":"compare-methods-by-which-companies-can-be-grouped","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/compare-methods-by-which-companies-can-be-grouped\/","title":{"rendered":"Compare Methods by which Companies can be Grouped"},"content":{"rendered":"\n<h3>[vsw id=&#8221;labqtlwTF_c&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;]<\/h3>\n<h3><strong>Products and\/or Services Supplied<\/strong><\/h3>\n<p>The most widely used industry classification method is the grouping of companies offering similar products and\/or services. A company\u2019s classification is usually based on its principal business activity or the source from which the company derives a majority of its revenues or earnings. Sectors are used to describe a group of related industries.<\/p>\n<h3><strong>Business-Cycle Sensitivities<\/strong><\/h3>\n<p>Companies are sometimes grouped as cyclical or non-cyclical (defensive), depending on the company\u2019s relative sensitivity to the business cycle. A cyclical company is one whose profits are strongly correlated with the strength of the overall economy and generally experiences above-average profit variability. Examples would include automotive, construction, heavy equipment, and airline industries.<\/p>\n<p>A non-cyclical company is one whose performance is largely independent of the business cycle, such as a public utility company.<\/p>\n<h3><strong>Statistical Similarities<\/strong><\/h3>\n<p>Statistical approaches group companies based on the correlations of past securities\u2019 returns, often forming non-intuitive groups of companies through cluster analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-33147","post","type-post","status-publish","format-standard","hentry","category-equity","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - 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