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    what does the word alpha mean in english

    0  Views: 716 Answers: 1 Posted: 9 years ago

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    An alpha is the first alphabet in the Greek language.


    An Alpha is what your portfolio or mutual fund manager can do to provide value for his service vs the broad market or any measurable index.  Therefore, the higher the alpha, the more value your manager provides for you.  An example would be: a portfolio that outperforms the market while taking less than market risk. 


    Beta is the movement of your portfolio vs. the movement of the index.  If the S&P index is 1.0 and your beta is 1.1, then your portfolio is 10% more volatile than the market.  Hence, you'd expect to outperform the market by 10% since you're taking 10% more risk.


    Are you confused yet?


     


     



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