UNWEIGHTED INDEX

Unweighted Index is a basic arithmetic and geometric computation to average and compute stock indexes. Each stock in a certain index is invested with equal weight with equal amounts in dollars invested for each underlying stock. This way the performance of the index as a whole is not affected when one stock has a dramatic change due to the equal distribution of weight among the stocks. The weighted indexes differs because some stocks have more or less weight than the others as per their market capitalization.