Alpha represents the excess return of an investment compared to its benchmark index. Positive alpha indicates the investment outperformed its benchmark after adjusting for risk. Active fund managers aim to generate positive alpha, though consistently achieving it is difficult. Alpha is often used alongside beta to evaluate risk-adjusted performance.
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Quick Reference
Category
performance
Difficulty
Beginner
Reading Time
1 min
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Where You'll See This
This concept appears throughout stock detail pages and financial data.