Weighted Average Market Capitalization (redirected from weighted-average)

Weighted Average Market Capitalization

A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500.

Notes:

For example, if a company's market capitalization is $1,000,000 and the market capitalization of all stocks in the index is $100,000,000, then the company would be worth 1% of the index. The alternative to weighting by market cap is a price-weighted index such as the Dow Jones Industrial Average.

See also: Market Capitalization, Outstanding Shares, S&P 500