ARITHMETIC INDEX

It is a kind of securities index that make use of an arithmetic sum in order to determine the index’s changes without going through the difficult process of taking the securities’ relative size into consideration. But the arithmetic stocks index does not take into consideration the weightings based on price, market capitalization or any other metric but instead calculates only the raw changes in each component of the index and then divide the answer by the total index components.

It is also called as unweighted index.