Commodity Index

Commodity Index

An index that tracks a basket of commodities to measure their performance. These indexes will often be traded on exchanges, allowing investors to gain easier access to commodities without having to enter the futures market. The value of these indexes fluctuates based on the underlying commodities, and this value can be trade on the exchange much in the same way as stock-index futures.

Notes:

There is a wide range of indexes on the market, each of them varying by their components. The Reuters/Jefferies CRB Index, which is traded on the NYBOT, comprises 19 different types of commodities ranging from aluminum to wheat. They also vary in the way they are weighted some indexes, for instance, are equally weighted and others have a predetermined, fixed weighting scheme.

See also: Chicago Board of Trade - CBOT, Commodity Futures Trading Commission - CFTC, Commodity, Dow Jones AIG Commodity Index (DJ-AIGCI), Futures, Goldman Sachs Commodity Index - GSCI, New York Board of Trade - NYBOT