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 ?
Considering the fact that a capitalization-weighted index or equal-weighted index is a type of market index with individual components that are weighted according to their total market capitalization, it becomes clear that the large price moves in commodity-driven companies, the largest components of the TSE, had a significant effect on the value of the index"
The TOPIX is a free-float adjusted market capitalization-weighted index that is calculated based on all common stocks listed on the First Section of Tokyo Stock Exchange, the cash market of JPX, and is widely used as a benchmark by institutional investors in Japan.
The capped, float-adjusted, capitalization-weighted index, whose constituents are engaged in midstream activities involving energy commodities, is disseminated real-time on a price-return basis and on a total-return basis (AMEIX).
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).
The Borsa ystanbul National 100 (BIST 100) Index -- a capitalization-weighted index composed of national market companies except investment trusts -- was, however, a loss for its investors.
The Russell 2000[R] Index is a market capitalization-weighted index designed to measure the performance of the small-cap segment of the U.
The Index is a modified market capitalization-weighted index, with no country having a weight of more than 30% at each semi-annual rebalancing.
One drawback, however, is that because it tracks a market capitalization-weighted index, the fund's three largest holdings are pharmaceutical manufacturers Pfizer [PFE ***], Johnson and Johnson [JNJ ***], and Merck [MRK ***].
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 new offerings are designed for institutional investors seeking to further diversify their non-US asset allocations, and provide the potential for capital appreciation with less absolute risk than the capitalization-weighted index.
The company added that the S&P/TSX 60 is a capitalization-weighted index offering exposure to 60 large-cap Canadian companies in various industries and is structured to reflect the sector weights of the S&P/TSX Composite.