Eligibility is rules-based
An index methodology may consider market capitalization, liquidity, public float, industry classification, listing, location, financial requirements, and relative ranking.
Membership can change
A company may become a candidate when it grows into the relevant universe and satisfies the methodology. Companies can also leave because their characteristics change or because corporate events require an adjustment.
Why investors study candidates
When an index change is announced, funds that track the index may need to adjust their holdings. Candidate research studies conditions that may be relevant before an official change, but it does not predict or guarantee an addition.