What does alpha mean in investing?

In investing, alpha is a measure of an investment’s performance relative to a benchmark index, adjusted for risk. A positive alpha indicates that the investment has outperformed the benchmark, while a negative alpha indicates underperformance.

How is alpha calculated?

Alpha is calculated by subtracting the expected return (based on the asset’s risk and the market's performance) from the actual return of the asset or portfolio. The formula is: **Alpha = Actual Return - (Risk-Free Return + Beta × (Market Return - Risk-Free Return))**

Why is alpha important in the stock market?

Alpha is important because it allows investors to assess whether an investment or portfolio manager is adding value beyond what would be expected based on market conditions and the level of risk taken. A positive alpha signifies effective management, while a negative alpha may suggest underperformance.

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What is ALPHA (STOCK MARKET)?

ALPHA ADJUSTED FOR FEES

Alpha Adjusted For Fees shows excess returns relative to the market, accounting for costs and fees.

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What is ALPHA (STOCK MARKET)?

ALPHA ADJUSTED FOR FEES

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