Equity Index is a statistical indicator of changes in the market value of a certain group of shares or stocks. Sometimes it can be referred to as a Stock Index.
2. Specialized indices which are dealing with a particular industry
- They are composed for the measurement of financial values such as interest rates, inflation, etc.
- They can be stated as benchmarks of evolution
- They measure the price performance by their standardized methodology
- They can be performed in a passive manner as a low cost way to achieve the profit positions of popular indices
- An investor can not directly invest in indices. Investors have to buy index funds first.
A stock market index is the value that contains certain stocks and is calculated by applying equity index values (into a formula) with different weights. As a result, it varies according to the weight of each share in the index value.
Equity indices measure the price movement of stock and determine the general trend of the stock market.
The most important global equity indices in terms of trading volume are Dow Jones, Nasdaq, S&P500, FTSE and DAX.