Weighted Average Market Capitalization
 |
Definition of 'Weighted Average Market Capitalization'
A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500.
|
 |
Investopedia explains 'Weighted Average Market Capitalization'
For example, if a company's market capitalization is $1 million and the market capitalization of all stocks in the index is $100 million, then the company would be worth 1% of the index. The alternative to weighting by market cap is a price-weighted index such as the Dow Jones Industrial Average.
|
-
ETF success relies on the index with which it's paired. Discover three index genres for tracking average market performance.
Read More »
-
Find out the difference between mega-, large-, mid- and small-cap stocks. We show how each suits particular investing styles.
Read More »
-
Get to know the most important market indices and the pros and cons of investing in them.
Read More »
-
-
Indexes can track market trends, but they're not always reliable. Can you trust them?
Read More »
-
Read More »
-
Tracking errors have more of an influence on investor returns than you may know.
Read More »
|
|
