alpha means: The measure of the risk-adjusted return. The alpha is defined as the difference in investment returns and benchmark returns. This does not adjust for risks. An alternative way to generate an alpha is to regress the excess return of a security or mutual fund on the benchmark, for example SP500 excess return. Beta adjusts for risk by adjusting the slope coefficient. The intercept is called the alpha. Ex. Suppose a mutual fund returns 25 and has a short-term rate of 5 plus 20. The market excess return for the mutual fund is 9 Let’s say that the beta for the mutual fund is 2.2% higher than the SP 500. Expected excess return given risk = 2×9=18. Actual excess return is 20. The alpha can be expressed as 200 or 2 basis points. Alpha can also be called the Jensen Index. The benchmark that is used determines the alpha. It could be, for example, the intercept of a multifactor model which includes other risk factors than the SP 500. Related: Risk-adjusted return. (in Stock Market Dictionary)

What else does alpha mean?

  • This is the first letter in the Greek alphabet. (in Merlin Dictionary)
  • This is the first in a series. (in Merlin Dictionary)
  • A constellation’s brightest star. (in Merlin Dictionary)
  • When the return of the entire market is zero, the mathematical return estimate for a security is Alpha. From Alpha comes the mathematical estimate of return on a security when the market returns as a whole is zero. A In the formula R I = A + bR M This measures the return of a security R I For a certain return on the stock market, ( R m (where b Beta. (in Merlin Dictionary)
  • An investment portfolio can earn a higher return due to its manager’s skill than it does from the market. (in Merlin Dictionary)
  • The highest ranking or dominant member of one’s sex group. It is used to refer to social animals. (in Merlin Dictionary)
  • A position in which the number of carbon atoms in an organic molecule is greater than one. (in Merlin Dictionary)
  • The first isomer in a group, or molecules with similar properties or origin, that has been arbitrarily determined by the people who discovered or classified them. Combination. (in Merlin Dictionary)