The alpha formula evaluates a portfolio's risk-mitigated performance by quantifying excess or aberrant returns compared to a benchmark. Active managers strive to generate alpha, diminishing …

May 6, 2024 · Alpha is computed in relation to the capital asset pricing model. The CAPM equation is used to identify the required return of an investment; it is often used to evaluate realized performance...

Alpha is a measure of the performance of an investment as compared to a suitable benchmark index, such as the S&P 500. An alpha of one (the baseline value is zero) shows that the return on the …

Apr 26, 2024 · In general, the formula for alpha can be explained as the difference between the return of an investment portfolio (e.g. stocks, bonds) and a benchmark return (e.g. S&P).

Sep 13, 2024 · Discover the power of the Alpha Equation in investing! This article breaks down what alpha means, how to calculate it, and practical strategies to enhance your investment returns.

Feb 25, 2025 · Alpha measures if a manager's skill, not luck, adds investment value beyond market returns. Understanding alpha helps investors avoid paying for market risk (beta) that can be managed...

Jun 3, 2025 · In this article you will learn how to calculate the Alpha of your portfolio and evaluate your performance as a portfolio manager.

Jun 2, 2024 · In this article, I’ve demonstrated how to calculate alpha in Excel. Follow thoroughly so that you can use it yourself.

Jul 27, 2023 · Guide to the Alpha Formula. Here we discuss how to calculate the Alpha along with practical examples, calculator and downloadable excel template.

Dec 1, 2025 · The basic alpha calculation simply subtracts the total return of your investment from the return of the benchmark. There’s a more advanced technique called Jensen’s alpha that includes …