Investopedia

Continue to Site »

Arithmetic Index

Filed Under » ,
Dictionary Says

Definition of '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, price, or any other metric, but merely calculates the raw changes in each component, then divides the sum by the number of index components.

Also known as an "unweighted index".
Investopedia Says

Investopedia explains 'Arithmetic Index'

Most stock indexes are market-cap weighted, which means that the largest companies will exert a larger influence on the index that the smallest. The Standard & Poor's 500 Index and the Nasdaq-100 are both market-cap weighted, while the Dow Jones Industrial Average (DJIA) is price-weighted. The Value Line index is calculated arithmetically, although few other major indexes fail to account for the size of their components in some way.


Articles Of Interest

  1.

    Benchmark Your Returns With Indexes

    If your portfolio is always falling short, you may not be making an apples-to-apples comparison.

  2. How Now, Dow? What Moves The DJIA?

    Find out how this index tracks market movements - and where it falls short.

  3. How do I find mutual funds that track indexes?

    The two best sources for finding index funds are Fidelity Investments and Vanguard.Of the 57 index funds in investment research firm Morningstar's database, two fund companies account for 39 ...

  4. The NYSE And Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.

  5. Which Mutual Fund Market Cap Suits You?

    Different funds invest in companies with different market caps. Find out which is right for you.

  6. How To Make A Winning Long-Term Stock Pick

    Discover the key elements of a good long-term investment and how to find them.

  7. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.

  8. Are The NYSE Trading Floor's Days Numbered?

    The Intercontinental Exchange plans to buy the NYSE Euronextfor $8.2 billion. This article examines the implications of the potential sale.

  9. Has High Frequency Trading Ruined The Stock Market For The Rest Of Us?

    HFT is a controversial trading strategy. This article looks at how HFT affects the retail investor.

  10. Stock Exchanges Around The World

    We tell you about five of the most popular stock exchanges from around the globe.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  2. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  3. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  4. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.

  5. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.

  6. Consequential Loss

    The amount of loss incurred as a result of being unable to use business property or equipment.
Trading Center