Capitalization-Weighted Index


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Capitalization-Weighted Index

A stock index which is computed by adding the capitalization (float times price) of each individual stock in the index, and then dividing by the divisor. The stocks with the largest market values have the heaviest weighting in the index. See also Float, Divisor.

Capitalization-Weighted Index

An index in which the price is determined by the price of individual stocks, weighted for total market value. For example, if the price of a component stock of the index changes, its effect on the index as a whole is proportionate to share's price multiplied by the number of shares the company has outstanding. This means that changes in price will affect the index more if the component company has greater value. Most non-American market value-weighted indices give further weighting (called float-weighted indexing) to properly account for partial government ownership of many large corporations. This method of index weighting contrasts with a price-weighted index, in which all price changes are weighted differently, and a market share-weighted index, which weights only by the number of shares outstanding and not by their value. Major examples of a market value-weighted index include the NASDAQ Composite Index and the Standard & Poor's 500. The latter uses float-weighted indexing to match its calculations more closely with foreign counterparts.
References in periodicals archive ?
The float-adjusted, capitalization-weighted index, whose 50 constituents represent approximately 75% of total market capitalization, is disseminated real-time on a price-return basis (AMZ) and on a total-return basis (AMZX).
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The new financial instrument, called Lyxor ETF Japan (Topix), is aimed at giving both institutional and private investors access to the market capitalization-weighted index made up of all the 1,718 firms traded on the TSE First Section, the three said in a joint statement.
The exchange said a contract it has signed with Morgan Stanley ''aims to meet the strong demand for a hedging and investing instrument that is based on a globally recognized, capitalization-weighted index, which reflects the sectoral diversity of the Japanese equity markets.
The NASDAQ Internet Index is a modified market capitalization-weighted index designed to track the performance of the largest and most liquid U.
The capped, float-adjusted, capitalization-weighted index, whose constituents earn the majority of their cash flow from the pipeline transportation, storage, and processing of energy commodities, is disseminated real-time on a price-return basis (AMZI) and on a total-return basis (AMZIX).
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.
COLUMBUS, Ohio, May 13, 2015 /PRNewswire/ -- The Diamond Hill Valuation-Weighted 500 ETF (NYSE: DHVW), a new Exchange Traded Fund (ETF) that uses an intrinsic value capitalization approach to track an index seeking to outperform traditional broad-based market capitalization-weighted index funds, was launched May 12, 2015 by Diamond Hill Capital Management, Inc.
The float-adjusted, capitalization-weighted index, which includes 50 prominent companies and captures approximately 75% of available market capitalization, is disseminated real-time on a price-return basis (NYSE: AMZ) and on a total-return basis (NYSE: AMZX).
In just six months WisdomTree has become an important innovator in the world of indexing and ETFs by offering investors a viable alternative to traditional capitalization-weighted index products.
The Index is a market capitalization-weighted index representing approximately two-thirds of the total market value of all domestic stock.