What is Alpha
Alpha is a measure reflecting the performance of an investment or investment portfolio. It is often used interchangeably with "excess return" to reference additional atypical gains obtained by a trader when his/her investment surpasses a benchmark market return that reflects the overall movements within the market. However, alpha can also be negative, implying that a portfolio or investment is performing poorly compared to the market. Alpha is the outcome of active investing, the careful consideration of portfolios by an agent regarding which investments to make. Alphas are used jointly with Betas to make investment decisions.