The share indices are a measure of the value of the securities represented in them and are divided into various categories.
First of all, there are the Equally Weighted stock indexes: the securities they contain have the same weight, regardless of the size (capitalization) of the company represented.
Then we have the Price Weighted indices which, as the name suggests, also vary according to the share price. The more the price of a stock rises, the more it will have a greater weight in the stock index in question.
Among the categories of equity indices we also find that of the Value Weighted which are based on the capitalization of the securities contained therein. The higher a company’s value, the more its stock will affect the index. Most equity indices are calculated using the Value Weighted method.
Remember, however, that stock indices can also be classified by geography or sector.
Click here for a complete guide on stock indices, from their definition to their importance to the markets.
