Alpha

A measure of performance on a risk adjusted basis.

REMARKS

Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index.

The excess return of the fund relative to the return of a benchmark index is the funds alpha.

The abnormal rate of return on a security or portfolio in excess of what would be predicated by an equilibtium model like the CAPM (Capital Asset Pricing Model).