Portfolio Risk & Return

Alpha

Return beyond what a portfolio’s market exposure would explain. If the market rose 10% and a portfolio with a beta of 1.0 rose 12%, the extra 2 points are its alpha; a portfolio that merely tracked the market, adjusted for its beta, has an alpha of zero. Positive alpha is what active managers are paid to deliver, and it is rarer than it sounds: much apparent extra return turns out to be extra risk, a lucky stretch or a tilt toward a factor, and fees often consume what remains. Over short windows it is especially noisy.

Educational information, not investment advice. See it applied across the screener →