alpha
/ˈælfə/
excess return on an investment relative to the return of a benchmark index
alpha in a sentence
“The fund manager generated 4% alpha by outperforming the S&P 500.”
Origin of alpha
Greek letter α (alpha), first in the alphabet — representing the first or excess return
Related Words
beta
a measure of how much a security moves relative to the broader market; a beta above 1 means more volatile
P/E ratio
price-to-earnings ratio — the price of a stock divided by its annual earnings per share
short squeeze
a rapid price increase that forces short sellers to buy back shares at a loss, accelerating the rise
market order
an instruction to buy or sell a security immediately at the best available current price
diversification
spreading investments across different assets, sectors, or geographies to reduce risk
drawdown
the peak-to-trough decline in a portfolio's value during a specific period