DEFINITION of 'Industry Group'

A classification method for individual stocks or companies, usually grouped based on common lines of business. Although there is no official standard for industry group classification, Investor's Business Daily has a proprietary model that is popular with 197 industry groups, and Reuter's Baseline uses another, with about 185. Most designations will have somewhere between 150 and 200 industry groups in total, with the sum total of industry groups capturing nearly all of the economy as can be measured by the GDP.

BREAKING DOWN 'Industry Group'

For example, some general industry group classifications are drug retailers, forestry products and semiconductor equipment.

Industry group-level research is a good place for investors to start when doing individual company research - most of the companies within one industry group tend to rise and fall as a whole. By knowing the trends in place within the industry group, investors can better understand the investment potential of the companies within that group.

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