fintech-algorithms

Price-Weighted Index

Install and import

bash
npm install fintech-algorithms
ts
import { calculate } from "fintech-algorithms/index-and-benchmark-engineering/weighting-and-capping/price-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
{
  "prices": [50, 75, 25, 100],
  "divisor": 0.25
}

Call

calculate(data)

Returns

object with 4 fields: priceSum, divisor, indexLevel, weights

{
  "priceSum": 250,
  "divisor": 0.25,
  "indexLevel": 1000,
  "weights": [0.2, 0.3, 0.1, 0.4]
}

Diagrams

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

Calculation flow

Price-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 Price-Weighted Index"]
    E --> F["Recompute invariants"]
    F --> G{"Checks pass?"}
    G -->|No| D
    G -->|Yes| H["Publish audited output"]
Price-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