The Comprehensive Guide to

Passive Income Investing


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How to Become Financially Independent Through Passive Income Investing

What is Market Proxy?

A market proxy is a variable that theoretically simulates the behavior of the overall market.

How Does Market Proxy Work?

Analysts and investors use market proxies as part of statistical analyses and portfolio modeling. Analysts and investors also use market proxies as benchmarks for comparing the performance of a stock to that of the market. A market index, such as the Dow Jones Industrial Average (DJIA), is an example of a market proxy.

Why Does Market Proxy Matter?

A market proxy is a purely theoretical representation and cannot fully reflect the entire range of price movements for all market sectors. For instance, the Dow Jones Industrial Average only serves as an accurate market proxy for gauging the average performance of the 30 stocks that make up the Dow. A portfolio with a wide range of stocks and other assets would require a more sophisticated market proxy.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.