Definition of Alpha in finance
- Posted on November 13, 2019
- Financial Terms
- By admin admin
Alpha is a term used in trading to indicate risk-adjusted performance. It is one of the 5 technical risk ratios (beta, standard deviation, Sharpe ratio, R-squared, alpha).
Alpha is calculated by comparing the volatility of a fund or security to the risk-adjusted performance of a benchmark index. The alpha of the fund or security is the excess return compared to that of the index.
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