What Is a Line Graph?
A line graph—also known as a line plot or a line chart—is a graph that uses lines to connect individual data points. A line graph displays quantitative values over a specified time interval. In finance, line charts are commonly used to depict the historical price action of an asset or security.
- A line graph connects individual data points that, typically, display quantitative values over a specified time interval.
- Line graphs consist of two axes: x-axis (horizontal) and y-axis (vertical), graphically denoted as (x,y).
- In investing, in the field of technical analysis, line graphs are quite informative in allowing the user to visualize trends.
- While line graphs are used across many different fields for different purposes, their most common function is to create a graphical depiction of changes in values over time.
- In finance, line graphs are used to create visual representations of values over time, including changes in the prices of securities.
Understanding Line Graphs
Line graphs use data point "markers," which are connected by straight lines. These data points, connected by straight lines, aid in visualization. While line graphs are used across many different fields for different purposes, they are especially helpful when it is necessary to create a graphical depiction of changes in values over time.
Line graphs are often used in finance to create visual representations of values over time, including changes in the prices of securities, company revenue sheets, and histories of major stock indexes. They are also useful for comparing different securities.
In investing, specifically with respect to the field of technical analysis, line graphs are used by investors to visualize trends, which can greatly aid them in their analyses.
There are some limitations to line graphs. For example, line graphs often lose clarity when there are too many data points. It is also easy to manipulate them visually in order to achieve certain effects. For example, the apparent degree of change can be visually manipulated by adjusting the range of data points on the axes.
Line graphs can be constructed manually, or by using software, such as Microsoft Excel, which greatly improves the speed, and accuracy, of the end product.
Constructing a Line Graph
Line graphs consist of two axes: x-axis (horizontal) and y-axis (vertical). Each axis represents a different data type, and the points at which they intersect is (0,0). The x-axis is the independent axis because its values are not dependent on anything measured. The y-axis is the dependent axis because its values depend on the x-axis's values.
Each axis should be labeled according to the data measured along that axis. Then, each axis should be divided in appropriate increments (e.g., day one, day two, etc.). For example, if measuring the changes in a stock's prices for the previous two weeks, the x-axis would represent the time measured (trading days within the period), and the y-axis would represent stock prices.
When using line graphs to track the price of a stock, the data point most commonly used is the closing price of the stock.
For example, assume that on day one of trading, a given stock's price was $30, resulting in a data point at (1, $30). On day two of trading, the stock's price was $35, resulting in a data point at (2, $35).
Each data point is plotted and connected by a line that visually shows the changes in the values over time. If the value of the stock increased daily, the line would slope upward and to the right. Conversely, if the price of the stock was steadily decreasing, then the line would slope downward and to the right.
What Is a Line Graph Used for?
Line graphs are used to track changes over different periods of time. Line graphs can also be used as a tool for comparison: to compare changes over the same period of time for more than one group.
How Do You Explain a Line Graph?
A line graph is a graphical display of information that changes continuously over time. Within a line graph, there are various data points connected together by a straight line that reveals a continuous change in the values represented by the data points.
How Is a Line Graph Useful in Finance?
Line graphs are useful in finance because they are very effective at creating visual representations of trends over time. For this reason, they are often used to depict how a stock is performing over a specific period of time.
What Is the Line Graph in Graph Theory?
Graph theory is a mathematical discipline. Graph theory specifically studies graphs, mathematical structures that are used to model pairwise relations between objects.
In graph theory, a line graph is also called a covering graph, the derivative, the edge-to-vertex dual, the conjugate, the representative graph, the edge graph, the interchange graph, the adjoint graph, and the derived graph.
This is the formal definition of a line graph: Given a graph (G), its line graph (L(G)) is a graph such that each vertex of L(G) represents an edge of G, and two vertices of L(G) are adjacent if their corresponding edges share a common endpoint in G. A line graph is the intersection graph of the edges of G, representing each edge by the set of its two endpoints.
How Do I Make a Line Graph in Excel?
You can use a line graph in Excel to display trends over time. In Excel, line graphs are appropriate if you have text labels, dates, or a few numeric labels on the horizontal axis (x-axis).
Here are the steps to create a line graph in Excel. (If you are using numeric labels, empty cell A1 before you create the line chart):
- After inputting in your values, select the range (whatever range encompassing those values). For example, A1:D7.
- On the Insert tab, in the Charts group, click the Line symbol ("Insert line chart")
- Click "Line with Markers"
How Can I Make a Line Graph in Google Sheets?
In Google Sheets, creating a line graph can help you identify trends in data over time. Here are the steps for formatting your data in Google Sheets so you can create a line graph:
- In the first column, enter a label to describe the data. Labels from the first column show up on the horizontal axis
- If you want to include a category name, in the first row of each column, enter a category name. Entries in the first row show up as labels in the legend
- For every other column, enter numeric data. You may also choose to add a category name
- For the other cells, enter the data points you’d like to display
- Every row in the Sheet represents a different line in the chart
For more information about how to customize your line chart, Google provides a help center for all of its tools, including Google Sheets.