Glossary entry
A stock index summarizes the performance of a defined group of shares using a stated calculation method. Its selection and weighting rules determine the market segment it represents. Indexes can track a country, sector, size category, or investment theme, and versions may measure price changes alone or include dividend reinvestment.
Illustrative example
A banking index may decline after weaker credit conditions even while a broad market index rises because companies outside banking offset the sector's losses.
What to consider
The name alone does not reveal concentration or methodology. Review constituents, weights, and return conventions before using an index as a benchmark.
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