# How do you find the corresponding market index of a stock?

If I have a stock, we say MSFT, and I want to find its corresponding market index - how do I do this?

I thought I needed to start by finding out which index the stock, in this case MSFT, is included in and from there I know which is its market index. However, I have discovered that it is very difficult to find a answer to which index a certain stock belongs to and it also seems that some belong to several indices.

So, how do you really find the corresponding market index of a stock? And if it belongs to several indices, which one should I use if I want to check the market index for a specific stock?

As an example, here I found a list of which index memberships MSFT belongs to. But if I want to analyze MSFT corresponding market index - which one should I download data from?

• This really depends on what you're trying to do with the stock index. For example, if your only goal is to find such index that the CAPM beta to the index leaves the least unexplained movement by the stock - you could brute-force seach for it, and find that the IT Sector one best explains this single stock. But for some other contexts you may prefer a broader index, so the tail doesn't wag the dog. What are you trying to do? Jun 14, 2022 at 0:36
• @DimitriVulis Thank you for your answer! I am trying to compute the CAPM beta for the MSFT stock using the market index and the formula cov(stock, index)/stdev(index). Jun 14, 2022 at 0:42
• if you're trying to match the beta on sites like Yahoo Finance, then use S&P 500 for all U.S. stocks (even if they are not S&P 500 constituents / large caps). Me, I might prefer Russell 3000 for all U.S. stocks - broader, less large cap biased. But if you're trying to minimize the appearance of idiosyncratic / unexplained / specific risk, then just search for the index, probably industry-specific one, beta to which minimizes the unexplained. Does it matter for your problem whether you have all betas to the same index? Jun 14, 2022 at 1:03
• I think you are not looking for the 'index of a stock', but for the 'index corresponding to an economic area'. These indices are then more or less canonical choices (as @DimitriVulis pointed out), e.g. SP500 for the US, GDAX for Germany, CAC40 for France etc. Jun 14, 2022 at 6:47
• How do you find the corresponding union for a country? The data tells me France is in the EU but it also tells me France is in NATO. How do I know which one is correct? <- basically your question - does it make sense? Jun 14, 2022 at 15:29