Alpha Risk
Categories: Financial Theory, Investing, Stocks, Managed Funds, Company Valuation, Derivatives, Metrics
Alpha risk is a ratio that your portfolio manager uses to compare her picks for your fund or portfolio against a benchmark (that could be other funds or the S&P 500).
If your manager picks a bunch of stocks and investments that push your fund up 10% in a year when the S&P 500 (or whatever the benchmark is) is doing 8%, your manager gets bragging rights (and possibly a nicer office and a promotion).
Alpha risk is often expressed in math equations that would only make a mathlete happy, but the main thing to remember is that when someone talks about High Alpha, that's good (low Alpha is bad).
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Finance: What is Alpha?11 Views
Finance allah shmoop what is alfa All right well you've
heard of the alfa dog the alfa male an alfa
bet soup investing alfa is good when you have a
lot of it If your index iii the set of
investment returns numbers you were being measured against was saying
the s and p five hundred and it went up
eleven percent last year and you ve a trading or
investing in stocks and maybe options and whatever other vehicles
you deployed like dead and you know leverage and you
were on lee up eight percent last year Well then
you had low alfa sorry just keeping it real You
actually destroyed value after all your hard work from that
year you could have done nothing I he just let
your money sick and an s and p five hundred
index fund played golf all day and night If you
you know had those glow in the dark ball thing
is and you would have done three hundred basis points
better than you did trying teo you know outsmart mr
market So hi alfa Good low alfa bad unlike your
depressing golf score ask sophie if you need some help 00:01:09.415 --> [endTime] Home
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