Alpha Definition

Below please find a definition of “Alpha”

Financial Analysis Training & Glossary TermsAlpha: Measures the value that an investment manager produces, by comparing the manager’s performance to that of a risk-free investment (usually a Treasury bill). For example, if a hedge fund had an alpha of 1.0 during a given month, it would have produced a return during that month that was one percentage point higher than the benchmark Treasury. Alpha can also be used as a measure of residual risk, relative to the market in which a fund participates.

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