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Creating a "Hybrid" Price

Discussion in 'Strategy Development' started by mahras2, Feb 16, 2006.

1. mahras2

I am trying to create a "Hybrid" price to do some research with. Basically what I am looking to do is create a price based upon the values of 3 other prices, each equally weighed.

For example I would like to combine the values say three securities X, Y, and Z where each will constitute 33.33333% of the value of the "hybrid" price. Thus, changes in X will have a 33.3333% change in the hybrid price.

Anyone willing to help me out regarding how I can do this?

2. Norm

Perhaps I am missing something here. But, wouldn't a simple arithmatic average do what you want. Just add the three prices togeter and divide by three.

Norm

3. mahras2

Yes I thought it would. However, say you have X at 1.000 while Z is at 200 then X won't have as big of an impact as Z.

Edit: Wow. I can't believe I didn't realise how to do this. Just using a set value divided by the security price and then adding the three together would net me a "hybrid" price. DOH!

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