Accurately calculate weighted mean example of stock investments for better portfolio management.
Stock Weighted Mean Calculator
Enter your stock purchase lots below to calculate the weighted average price.
Price per share for Lot 1
Invalid price
Quantity purchased
Invalid quantity
Price per share for Lot 2
Invalid price
Quantity purchased
Invalid quantity
Price per share for Lot 3
Invalid price
Quantity purchased
Invalid quantity
Price per share for Lot 4
Invalid price
Quantity purchased
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Price per share for Lot 5
Invalid price
Quantity purchased
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Weighted Average Price
$0.00
Average cost per share across all lots
Total Invested$0.00
Total Shares0
Number of Lots0
Breakdown by Purchase Lot
Lot #
Price ($)
Shares
Total Cost ($)
Weight (%)
Price vs. Weighted Average Comparison
Blue Bars: Individual Purchase Prices |
Green Line: Weighted Average Price
What is Calculate Weighted Mean Example of Stock?
When investors look to calculate weighted mean example of stock portfolios, they are essentially trying to determine the average price paid per share across multiple transactions. Unlike a simple arithmetic mean, which treats every purchase price equally regardless of volume, a weighted mean accounts for the number of shares bought at each price point.
This calculation is critical for traders and long-term investors alike. If you buy 1 share at $100 and 100 shares at $50, your average cost is not $75 (the simple average). It is much closer to $50 because the volume of the second purchase carries more "weight." Accurately knowing how to calculate weighted mean example of stock entries helps in determining break-even points, tax obligations, and realistic portfolio performance.
This method is widely used by brokerage firms, financial analysts, and accounting software to provide a "Cost Basis" for your holdings. Understanding this math ensures you are not misled by simple averages when making sell decisions.
Weighted Mean Formula and Mathematical Explanation
The mathematical foundation to calculate weighted mean example of stock data involves summing the product of weights (shares) and values (prices), then dividing by the total sum of the weights.
The Formula: Weighted Mean Price = (Σ (Price × Shares)) / (Σ Shares)
Where:
Variable
Meaning
Unit
Typical Range
Price (P)
Execution price per share
Currency ($)
$0.01 – $10,000+
Shares (S)
Quantity purchased (Weight)
Integer/Float
1 – 1,000,000+
Σ (Sigma)
Sum of all values
N/A
N/A
Practical Examples (Real-World Use Cases)
Example 1: Dollar Cost Averaging (DCA)
An investor practices Dollar Cost Averaging into TechCorp Inc. They make three purchases over a volatile month to calculate weighted mean example of stock holdings:
Interpretation: The trader needs the stock to recover only to $29.17, not to the original $50, to break even. This illustrates the power of understanding how to calculate weighted mean example of stock strategies.
How to Use This Weighted Mean Calculator
Follow these steps to effectively calculate weighted mean example of stock purchases using the tool above:
Gather Trade Confirmations: Have your brokerage statements ready showing the execution price and quantity for each trade.
Enter Data Rows: Input the "Purchase Price" and "Number of Shares" for your first lot.
Add More Lots: Fill in subsequent rows for additional purchases of the same stock. Leave unused rows blank.
Review Results: The "Weighted Average Price" updates instantly. This is your effective cost basis per share.
Analyze the Chart: Use the chart to visualize how individual expensive or cheap lots are pulling your average up or down.
Copy Data: Click "Copy Results" to paste the analysis into your trading journal or Excel sheet.
Key Factors That Affect Weighted Mean Results
When you calculate weighted mean example of stock data, several financial factors influence the final outcome and its utility:
Volume (Weight) Disparity: Large orders dominate the average. A purchase of 1,000 shares moves the needle significantly more than a purchase of 10 shares, regardless of price difference.
Price Volatility: High volatility creates wider gaps between purchase prices. A weighted mean smooths this out, providing a clearer picture of true cost than a simple price chart.
Transaction Fees: While this calculator focuses on raw price, real-world cost basis often includes commissions. You can add commissions to the total cost manually or adjust the input price to include fee-per-share.
Stock Splits: If a stock splits (e.g., 2-for-1), you must adjust previous share counts and prices before adding them to new post-split purchases to calculate weighted mean example of stock accurately.
Dividend Reinvestment: Reinvested dividends (DRIP) count as small "purchases" at specific prices. Including these lowers or raises your weighted average depending on the market price at dividend time.
Currency Fluctuations: For international stocks, the exchange rate at the time of each purchase affects the true "weighted cost" in your home currency.
Frequently Asked Questions (FAQ)
Why is the weighted mean different from the simple average?
The simple average adds prices and divides by the number of transactions. It ignores volume. The weighted mean accounts for how much money was actually spent, making it the only accurate metric for portfolio tracking.
Does this calculator include selling shares?
No. This tool is designed to calculate weighted mean example of stock accumulation (buying). Selling shares generally follows FIFO (First-In-First-Out) or LIFO accounting rules and does not change the weighted average cost of the remaining shares.
How do I handle stock splits?
If a 2:1 split occurred, multiply your pre-split shares by 2 and divide your pre-split purchase price by 2 before entering the data into the calculator.
Can I use this for crypto or mutual funds?
Yes. The math to calculate weighted mean example of stock is identical for cryptocurrency, mutual funds, ETFs, or even inventory management for businesses.
What is a good weighted mean price?
A "good" price is one that is lower than the current market price (CMP). If your weighted mean is below the CMP, your total position is profitable.
Does the weighted mean change if I sell half my position?
Mathematically, no. If you sell 50% of your holdings proportionally, the average cost per share of the remaining shares remains the same, although your total invested capital decreases.
Why calculate weighted mean example of stock frequently?
Active traders calculate it to manage risk. Knowing your exact break-even point allows you to set stop-losses effectively and avoid emotional selling during minor dips.
Is this the same as Cost Basis?
Yes, for most tax purposes, the "Average Cost Basis" method is exactly this weighted mean calculation, though some tax jurisdictions require specific lot identification methods.
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