Weighted Index/Unweighted Index

   Stock indices are calculated in two ways, either weighted or unweighted. The unweighted indices are simple arithmetic or geometric averages. In weighted indices certain stocks carry a greater weighting than others, usually based on their market value or capitalization.

Financial and business terms. 2012.

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  • weighted index — An index where the impact of each of the index constituents is weighted, usually by reference to the market value of each constituents. To give a simple illustration, an index of two companies, where the first company has a total market… …   Financial and business terms

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  • unweighted index — An index where all the constituents of the index are equally weighted when calculating the index value. This has a weakness in that it tends to overstate the importance of the smaller constituents of the index. One of the few examples of this is… …   Financial and business terms

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  • stock index — An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition the sampling of stocks, the weighing of individual stocks, and the method of averaging… …   Financial and business terms

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  • Arithmetic Index — An index of securities that uses an arithmetic sum to determine changes in the index without taking the relative size of the securities into account. An arithmetic index of stocks does not incorporate weightings based on market capitalization,… …   Investment dictionary

  • Mean — This article is about the statistical concept. For other uses, see Mean (disambiguation). In statistics, mean has two related meanings: the arithmetic mean (and is distinguished from the geometric mean or harmonic mean). the expected value of a… …   Wikipedia

  • Stock market — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

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