What is alpha factor?
In other words, alpha is a measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra return awarded to the investor for assuming a risk, instead of accepting the market return. Alpha may be seen as a measure of a fund manager’s performance.
What is alpha on Wall Street?
Alpha Definition Alpha refers to the incremental return achieved by fund managers in excess of benchmark returns. If an investment strategy has generated alpha, the investor has “beat the market” with abnormal returns above that of the broader market.
How is alpha calculated?
What is Alpha Formula?
- Alpha = Actual Rate of Return – Expected Rate of Return.
- Expected Rate of Return = Risk-Free Rate + β * Market Risk Premium.
- Alpha = Actual Rate of Return – Risk-Free Rate – β * Market Risk Premium.
What is a good alpha in investing?
Defining Alpha Alpha is also a measure of risk. An alpha of -15 means the investment was far too risky given the return. An alpha of zero suggests that an asset has earned a return commensurate with the risk. Alpha of greater than zero means an investment outperformed, after adjusting for volatility.
What is alpha and beta in semiconductors?
Alpha of a transistor is defined as the current gain in the common base configuration which is in turn defined as the ratio of change in the collector current to change in the emitter current. It can possess a maximum value of one. Also, beta is the current gain in Common Emitter configuration.
What is a good alpha score for a fund?
A positive alpha of 1.0 means the fund or stock has outperformed its benchmark index by 1 percent. A similar negative alpha of 1.0 would indicate an underperformance of 1 percent. A beta of less than 1 means that the security will be less volatile than the market.
What does alpha measure?
Alpha is a measure of an investment’s performance on a risk-adjusted basis. It takes the volatility (price risk) of a security or fund portfolio and compares its risk-adjusted performance to a benchmark index. The excess return of the investment relative to the return of the benchmark index is its alpha.
What is r squared finance?
R-squared measures how closely the performance of an asset can be attributed to the performance of a selected benchmark index. R-squared is measured on a scale between 0 and 100; the higher the R-squared number, the more correlated the asset is to its benchmark.
How do you find the alpha of a portfolio?
Alpha = R – Rf – beta (Rm-Rf) Where: R represents the portfolio return. Rf represents the risk-free rate of return. Beta represents the systematic risk of a portfolio.
What does OCF stand for?
Operating Cash Flow (OCF) Loading the player… Operating cash flow is a measure of the amount of cash generated by a company’s normal business operations. Operating cash flow indicates whether a company can generate sufficient positive cash flow to maintain and grow its operations, or it may require external financing for capital expansion.
What is operating cash flow (OCF)?
Operating cash flow (OCF) is a measure of the amount of cash generated by a company’s normal business operations. Operating cash flow indicates whether a company can generate sufficient positive…
What is the open cost of capital (OCF) in mutual funds?
The OCF is made up of the fund manager’s fees for running the portfolio, along with other costs, such as administration, marketing and regulation. It’s meant to be used as a standardised method of comparing the costs of funds, and it’s certainly worth examining before you invest.
What is an ongoing charges figure (OCF)?
Fund managers publish their ongoing charges figure (OCF) – previously known as the total expense ratio (TER) – to give an indication of the cost of investing in their funds. Costs matter in investing.