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What is Alpha (α)?
The extra return an investment generates relative to the market index; a measure of manager skill.
ExampleThe BIST 100 returned 10% while the portfolio returned 14%; alpha = 4%.The figures in the example illustrate the concept; they are not current market data.
Related terms
Beta (β)A stock's sensitivity relative to the market index; a beta of 1 moves with the index, above 1 is moreSharpe RatioA ratio that measures an investment's excess return per unit of risk.Active ManagementA strategy in which the portfolio manager makes ongoing buy and sell decisions to beat the market return.ArbitrageA strategy that aims to earn a risk-free profit from the price difference of the same asset in different
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Frequently asked questions
What is Alpha (α)?
The extra return an investment generates relative to the market index; a measure of manager skill.
What is Alpha (α) called in Turkish?
In Turkish financial reporting and news, Alpha (α) is called Alpha.
Which concepts are related to Alpha (α)?
The concepts most often mentioned together with Alpha (α) are Beta (β), Sharpe Ratio and Active Management.
More terms in Fundamental analysis
Asset AllocationBalance SheetBear MarketBondBull MarketCapital Expenditure (Capex)Cash FlowCorrelationDilutionDiscount RateDiscounted Cash FlowDiversificationDividendDividend YieldEarnings Per ShareEarnings ReleaseEarnings SurpriseEnterprise Value (EV)EquityEV/EBITDAFair ValueGross Profit MarginGrowth StockHigh-Frequency Trading (HFT)Income StatementInsider TradingInternal Rate of ReturnInvestment InstrumentsLeverageLiquidityMargin CallMarket CapitalizationNet Profit MarginOpen PositionP/B Ratio (Price-to-Book)P/E Ratio (Price-to-Earnings)PortfolioReturn on AssetsReturn on EquityShort PositionSpreadStop-LossStop-Loss OrderValue StockVolatilityWeighted Average CostWeighted Average Cost of Capital