Arithmetic index

Arithmetic Index

An average in which no values count for more than others. That is, an arithmetic index simply adds the value of all data and divides by the number of data points. An arithmetic index is less common than a weighted average; that is, most indices weight for price or market capitalization. However, the Value Line composite index has an arithmetic version.

Arithmetic index.

An arithmetic index gives equal weight to the percentage price change of each stock that's included in the index.

In computing the index, the percentage changes of all the stocks are added, and the total is divided by the number of stocks. The percentage price changes of large companies aren't counted more heavily, as they are in a market-capitalization weighted index.

An arithmetic index is a more accurate measure of total stock market performance than an index that stresses relatively few high-priced or large-company stocks. However, some analysts point out that it may also produce higher total return figures than other indexing methods.

The best known arithmetic index in the United States is the one computed by Value Line, Inc., which tracks the approximately 1,700 stocks. Standard & Poor's also calculates an arithmetic version of the S&P 500 index.

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The estimated annual growth rates of agricultural GDP and the TFP using arithmetic index procedure based on 1960-61 and 1980-81 weights are given in Table 3.
Given the dependence of results for the arithmetic index on which weights are used, a Divisia index is considered to be the appropriate method in this case.
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6) For use in the arithmetic index, the data series for gross value of output based on 1980-81 prices was obtained from the Report of the Sub-Committee on Sources of Growth, Committee on Economic and Social Well-Being for the Eighth Five Year Plan, May 1992 [Kemal and Islam (1992)].
Total factor productivity growth in Pakistan's agriculture: 1960-1996
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COMPUTING TOPOLOGICAL INDICES OF DIRECT INTERCONNECTION NETWORKS

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