Alpha
InvestingGlossary term
Definition
A measure of an investment's performance compared to a benchmark index. Positive alpha indicates outperformance, negative alpha indicates underperformance. Represents the value added by active management.
Related terms
- BetaA measure of a stock's volatility relative to the overall market. A beta of 1 means the stock moves with the market, above 1 means more volatile, below 1 means less volatile.
- BenchmarkA standard index or portfolio used to measure investment performance. Common benchmarks include the S&P 500 for large-cap stocks and the Bloomberg Aggregate Bond Index for bonds.
- PortfolioA collection of financial investments like stocks, bonds, mutual funds, ETFs, and other assets. Diversifying your portfolio helps manage risk.
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