unweighted index

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Unweighted Index

An index where all securities represented in it affect the index equally. That is, an unweighted index does not give any preference to aspects like market capitalization or price when one calculates its value. For example, given an unweighted index of three stocks, one priced at $10, one at $15, and one at $20, the value of the index will be $15, which is simply the average of the three prices. The Value Line averages are prominent examples of unweighted indices.

unweighted index

A stock price index that is calculated with equal weighting for each component. Unweighted indexes such as the Value Line averages are useful for individuals who invest an equal dollar amount in each stock.
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