the.com/alpha
The return you brag about; beta is the return you actually get.
means The excess return a strategy or manager generates above what you'd expect given the risk taken — the skill premium, not just market luck.
from Straight from the Greek letter alpha, borrowed into finance in the 20th century through the Capital Asset Pricing Model, where a stock's return was broken into a baseline (alpha, the intercept) and a market-driven slope (beta). Alpha stuck as shorthand for 'the part no formula can explain away' — the manager's claimed edge.
- origin
- named after first letter, as in first mover
- finance meaning
- excess return beyond what risk predicts
- harsh truth
- most claimed alpha is just luck wearing a suit
- bro usage
- also means loudest person in the group chat