Bryan
Bryan

Alpha (or Alfa) + Beta

Definition

Alpha describes outperformance in a market. If someone “drops alpha,” it means they have info that can give investors an edge over the market to get a higher return than the benchmark (beta). 

Beta means average returns on the market. It is used as a benchmark to determine if you are outperforming the market.

Examples of Usage

  • “You want to compete against less-skilled investors because you have alpha.” 
  • “Our line-up includes more than 20 mutual funds in different industries, asset classes and six strategic beta ETFs and four active ETFs”. 

Note: Beta, in this case, means that this investment aims to perform as well as the overall market.

Regular definition

In the financial world, alpha is a measure of the performance of an investment portfolio relative to a chosen benchmark, usually a stock index, such as the S&P 500. It is one of the best ways to measure which investor managed to “beat” the market over a specific period. The alpha can be positive or negative, depending on how close it is to the price.

A beta coefficient is a measurement tool used to determine the volatility of an asset concerning the volatility of the overall market or a particular portfolio. 

Bryan
Bryan

Bryan indulges in every bit of crypto-related news and material he can lay his hands on. As such, he often shares his views and advice through the onXRP content platform. He is a firm believer in crypto’s potential in the financial and economic world. With 5 years of experience in investing and trading Bryan brings excellent insights to the table. He is excited to bring much of this knowledge and many of his skills to the onXRP platform.