The VARIANSE AUD/NZD Index provides a measure of the Australasian Economy

Australia and New Zealand have one of the most open economic and trade relationships of any two countries.

This is based on a comprehensive set of trade and economic arrangements, collectively known as Closer Economic Relations (CER), which underpin substantial flows of merchandise trade, services, investment, labour and visitors between the two countries.

Considering that New Zealand has a market economy that depends greatly on international trade, mainly with Australia, the AUD/NZD Index provides a broad based measure of benchmarking both economies.

Now for the maths...

1. First we calculate the Geometric Mean (GM) of the     Basket

    where:
    N          = Number of components
    Pair N  = Market price of Nth Pair

2. Then we multiply the value A by the constant     factor*

       *A constant factor is used to turn the basket into an
       index which sets the value of the basket to usually
       equal 1 or 100 at a pre-determined date in the past,
       this allows for easier tracking and simpler pricing.