Alpha
Measures outperformance relative to a benchmark.
Detailed Description
Alpha
What does a positive alpha indicate?
A positive alpha indicates that an investment has outperformed the market after adjusting for risk.
How is alpha calculated?
Alpha is calculated by subtracting the risk-adjusted return from the actual return of the investment.
What is the difference between alpha and beta?
Alpha measures excess return, while beta measures an investment's volatility relative to the market.
Why is alpha important in portfolio management?
Alpha helps identify skilled managers who can generate excess returns, guiding investment decisions.
What are some factors that influence alpha?
Factors include market conditions, economic cycles, and the skill level of the fund manager.