Weighting refers to the symbolic weight or influence of something.
From the Latin ponderatio , weighting is the weight or relevance that something has . It is also the attention, consideration and care with which something is said or done.
The concept is common in stock markets, where we talk about the weight that each share has with respect to the index. In this case it is determined by establishing a comparison with the negotiated volume.
The weighting in the Ibex 35
For example: Telefónica , Grupo Santander , BBVA , Iberdrola and Repsol YPF are the securities with the highest weighting in the Ibex 35 , the main indicator of the Madrid Stock Exchange . These five companies determine more than 67% of the selective, while the remaining 30 companies do not reach 33%.
This means that the behavior of the five main actions has much greater influence than that of the other thirty. Therefore, the rises or falls of the index will depend almost exclusively on the most important values.
In other words, when it is said that the Ibex 35 (or another stock market indicator) rose or registered a positive balance, it does not mean that all stocks have advanced or that the majority of securities have managed to rise. Stock indices can close positively even when most stocks have registered losses , which can be explained by the weighting.
The weight of something or someone
Weighting is also the exaggeration of something or the action of weighing something : “The words of the old leader have a particular weight within this political movement ,” “The weight of the captain in the group is undoubted.”
As can be seen, in these cases the weighting refers to a symbolic weight (not measurable in figures) that is linked to influence.
The notion of weighting appears in the field of mathematics.
Weighting in mathematics
In mathematics , the weighted average is a relatively more complex method than the arithmetic method for calculating the average, but very useful on a practical level. To define it, we will use the following example: a teacher tells his students that the final exam will be worth three times, so that when calculating the grade average, the grade obtained in the latter case must be taken into account three times; If the values were 60, 70 and 65, their average would be obtained by performing (60 + 70 + 65 + 65 + 65) / 5.
If, on the other hand, one wished to apply the weighted average method to said problem, a table should be prepared in which the grade , its weighting and the value resulting from the multiplication of the first two were placed in columns; Therefore, 60 and 70 would have a weight of 1, while 65 would have a 3. Finally, as with the traditional method, the numbers obtained would be added (60 + 70 + 195) and divided by 5 ( the sum of the weights ).
The application of the weighted average method (also known as weighted average) is especially useful when the averages of many values with different weights must be calculated, as occurs in the study of per capita income of several countries. Through these simple steps, it is possible to obtain better organization and control over the figures, being able to easily identify an entry and modify it without having to recalculate the entire formula.
A parameter of a rating system
The grading systems of student centers use the concept of a weighting parameter to assign a particular weight to each group of exams, which influences the average grade, since it returns a different result than what would be obtained by simply adding all the grades. and dividing them by the amount.
This value determines in advance how important each test is when weighing a student's level to access a course or career. These are numbers that, in general, are not greater than 0.2 and that usually affect the average in tenths.