An index may also be classified in accordance with the method used to determine its price.
In a price-weighted index such as the DJIA, the price of each component stock is the only consideration when determining the value of the index. Thus, price movement of even a single security will heavily influence the value of the index even though the dollar shift is less significant in a relatively highly valued issue, while ignoring the relative size of the company as a whole.
In contrast, a capitalisation-weighted index such as the Hang Seng Index factors in the size of the company. Thus, a relatively small shift in the price of a large company will heavily influence the value of the index.
An equal-weighted index is one in which all components are assigned the same value. For example, the Barron's 400 Index assigns an equal value of 0.25% to each of the 400 stocks included in the index, which together add up to the 100% whole.