# What is unweighted index?

What is unweighted index?

As far as Im concerned, it’s price weighted index

it is equally weighted index. http://www.investopedia.com/terms/u/unweightedindex.asp

Cap-weighted - weight by market cap Price-weighted - weight by price (easiest way to calculate: take 1 share of each stock in index, add them all and divide by number of shares in index) Unweighted - equally weighted (equal dollar amount invested in each stock in index) - definatelly not the same as price weighted

It is not the same as a price weighted index. Price weighted - equal number of shares Unweighted/Equal weighted - equal dollar amount

An unweighted index is simply the arithmetic or geometric average between the stocks calculated in the indexes. So (following on from the investopedia link earlier on in the thread provided by waldziuchna), an example of an arithmetic unweighted index is: Where there are three stocks in an index returning, 10%, 11% and 15%. (0.10+0.11+0.15)/3 = 0.1200 =12% An example of a geometric unweighted index is: [(1+0.1)*(1+0.11)*(1+0.15)]^(1/3) = 1.1198 = 11.98% Following on is the next question of: What is a weighted index? A pretty good example of a price weighted index can be found on wikinvest: http://www.wikinvest.com/wiki/How_Stock_Indices_Work