Narrow-Based

Narrow-Based

Generally referring to an index, it indicates that the index is composed of only a few stocks, generally in a specific industry group. See also broad-based.

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narrow-based

Of or relating to an index composed of a limited number of securities or securities representing a particular segment of the whole. For example, the Dow Jones Transportation Average is narrow-based because it is composed only of the stocks of transportation companies. Compare broad-based.

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Narrow-Based

Describing an index that consists of only a few stocks. Generally speaking, a narrow-based index only includes stocks from one industry. These indices are often useful in gauging the performance of the industries they track, but rarely give an indication on movements in the broader economy. See also: Broad-based.