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".
BREAKING DOWN 'Arithmetic Index'
Most stock indexes are marketcap 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 Nasdaq100 are both marketcap weighted, while the Dow Jones Industrial Average (DJIA) is priceweighted. The Value Line index is calculated arithmetically, although few other major indexes fail to account for the size of their components in some way.

Unweighted Index
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Arithmetic Mean
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Weighted Average Market Capitalization
A stock market index weighted by the market capitalization of ... 
PriceWeighted Index
A stock index in which each stock influences the index in proportion ... 
CapitalizationWeighted Index
A type of market index whose individual components are weighted ... 
Capped Index
An equity index that has a limit on the weight of any single ...

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What's a PriceWeighted Index?
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