noun
alpha
An investment's return above a benchmark.
The analyst compares the fund's alpha with its chosen benchmark.
Etymology
Greek alpha supplies the name of the letter α. Its use as a statistical symbol gave finance a name for a measure of performance beyond a benchmark.
More examples
- The report shows positive alpha over the measured period.
- A change in benchmark alters the calculated alpha.
- The manager's presentation separates total return from alpha.
Similar words
- excess return
- An explicit description of performance beyond a selected benchmark.