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danclark
Posted : Wednesday, May 11, 2005 8:54:22 PM
Registered User
Joined: 3/31/2005
Posts: 29
 Hi,

I find the MG... industries very useful. But, I can't find anything in the docs about out how the industry price and volume is calculated. I.e. how is the price and volume related to the underlying symbols?

Is it volume weighted? Market Cap weighted? An average?

Regards,

Dan.
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Bruce_L
Posted : Wednesday, May 11, 2005 9:04:17 PM


Worden Trainer

Joined: 10/7/2004
Posts: 65,138
 Our Industry Average charts (the MGs) are essentially averages of the components of the group as presented in the corresponding WatchList. The Average chart is weighted based on the square-root of the capitalization of the stocks that make up that group. This allows for weighting, which is a common practice, but tends to minimize the overwhelming effect that a few large companies in the group might have on the industry average itself, if the industry also includes a number of smaller companies.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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danclark
Posted : Wednesday, May 11, 2005 9:43:34 PM
Registered User
Joined: 3/31/2005
Posts: 29
 Bruce,

Thanks! I think weighting is an excellent idea. To help me understand the weighting algorithm, is this Close and Volume example correct?

MG1 Close =
( StockA_MG1 Close * SQR(StockA_MG1 Market Cap)
+ StockB_MG1 Close * SQR(StockB_MG1 Market Cap)
+ StockC_MG1 Close * SQR(StockC_MG1 Market Cap)
+ ... to n stocks in the industry
) / n stocks in industry

Industry1 Volume =
( StockA_MG1 Volume * SQR(StockA_MG1 Market Cap)
+ StockB_MG1 Volume * SQR(StockB_MG1 Market Cap)
+ StockC_MG1 Volume * SQR(StockC_MG1 Market Cap)
+ ... to n stocks in the industry
) / n stocks in industry

Regards,

Dan.
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Bruce_L
Posted : Thursday, May 12, 2005 11:09:10 AM


Worden Trainer

Joined: 10/7/2004
Posts: 65,138
 You have the general idea, but the numbers won't match exactly. There are additional wrinkles to the process to make sure, for example, the Price and Volume numbers don't suddenly change when a stock enters or leaves a group.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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danclark
Posted : Thursday, May 12, 2005 1:23:09 PM
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Joined: 3/31/2005
Posts: 29
 Thanks!
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