fintech-algorithms

Fundamental-Weighted Index

Install and import

bash
npm install fintech-algorithms
ts
import { calculate } from "fintech-algorithms/index-and-benchmark-engineering/alternative-weighting/fundamental-weighted-index";

Signature

calculate(data)

Worked example

verified This is the worked example published in the article, replayed by the test suite on every run. The output cannot drift.

Input

data
{
  "records": [
    {
      "id": "A",
      "sales": 120,
      "cashFlow": 18,
      "bookValue": 70,
      "dividends": 4
    },
    {
      "id": "B",
      "sales": 90,
      "cashFlow": 15,
      "bookValue": 55,
      "dividends": 3
    },
    {
      "id": "C",
      "sales": 60,
      "cashFlow": 8,
      "bookValue": 45,
      "dividends": 2
    }
  ],
  "multipliers": {
    "sales": 1,
    "cashFlow": 4,
    "bookValue": 2,
    "dividends": 10
  }
}

Call

calculate(data)

Returns

object with 3 fields: ids, scores, weights

{
  "ids": ["A", "B", "C", "D"],
  "scores": [372, 290, 202, 128],
  "weights": [0.375, 0.292339, 0.203629, 0.129032]
}

Diagrams

Fundamental-Weighted Index — article hero
Fundamental-Weighted Index — failure guard
Fundamental-Weighted Index — worked example

Calculation flow

Fundamental-Weighted Index calculation flow 
flowchart LR
    A["Point-in-time inputs"] --> B["Validate units and timing"]
    B --> C{"Contract feasible?"}
    C -->|No| D["Reject with reason"]
    C -->|Yes| E["Calculate Fundamental-Weighted Index"]
    E --> F["Recompute invariants"]
    F --> G{"Checks pass?"}
    G -->|No| D
    G -->|Yes| H["Publish audited output"]
Fundamental-Weighted Index methodology state 
stateDiagram-v2
    [*] --> FrozenInputs
    FrozenInputs --> Validated: contract passes
    FrozenInputs --> Rejected: missing or infeasible
    Validated --> Calculated: apply named rule
    Calculated --> Audited: invariants pass
    Calculated --> Rejected: invariant fails
    Audited --> Published: version and timestamp recorded
    Published --> Revised: approved correction
    Revised --> FrozenInputs: rebuild from retained source state

How it works

This page states the contract — how to call it correctly. The article explains the concept: why it works, and where it breaks.

Read the article →

References