Alpha

Alpha is a statistic that measures how well an investment performed over a specific time period with respect to risk. A positive alpha score means the investment generated higher returns than other investments with similar risk level. A negative alpha means just the opposite.

Alpha helps you put investment performance into context. For example, strong performance during a given period may indicate that the investor made great investment decisions — or it could means that the investor took on a greater risk. Alpha normalizes investment performance, so that we could determine if the investment outperform or underperform other investments based on the risk level.