Alpha

Definition - What does Alpha mean?

Alpha is a measure of relative performance given a certain level of risk. Portfolio managers who are adding alpha to their portfolios are adding additional return through their asset selection. (2) A measure of the projected change in a security’s price as a result of fundamental factors relating only to that company.

Testopedia explains Alpha

Portfolio managers whose funds realize the highest alpha are providing the highest returns for their investors when measured against similar funds with similar investment objectives and risk profiles.

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