What is the purpose of investment analysts dividing the universe of listed companies into small cap, medium cap and large cap companies?

Question

Quizplus · Accepted Answer

Investment analysts divide the universe of listed companies into small cap, medium cap and large cap companies to measure whether certain sectors are outperforming others. This categorization helps investors in understanding the risk and return potential of companies of different sizes and in creating investment portfolios. It also helps in comparing the performance of companies within the same category and identifying the growth potential of smaller companies.

What Is the Purpose of Investment Analysts Dividing the Universe