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Measure of risk-adjusted performance. Some refer to the alpha as the difference between the investment return and the benchmark return. However, this does not properly adjust for risk. More appropriately, an alpha is generated by regressing the security or mutual fund's excess return on the benchmark (for example S&P 500) excess return. The beta adjusts for the risk (the slope coefficient). The alpha is the intercept. Example: Suppose the mutual fund has a return of 25%, and the short-term interest rate is 5% (excess return is 20%). During the same time the market excess return is 9%. Suppose the beta of the mutual fund is 2.0 (twice as risky as the S&P 500). The expected excess return given the risk is 2 x 9%=18%. The actual excess return is 20%. Hence, the alpha is 2% or 200 basis points. Alpha is also known as the Jensen Index. The alpha depends on the benchmark used. For example, it may be the intercept in a multifactor model that includes risk factors in addition to the S&P 500. Related: Risk-adjusted return.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


1. The measure of the performance of a portfolio after adjusting for risk. Alpha is calculated by comparing the volatility of the portfolio and comparing it to some benchmark. The alpha is the excess return of the portfolio over the benchmark. It is important to Markowitz portfolio theory and is used as a technical indicator.

2. The excess return that a portfolio makes over and above what the capital asset pricing model estimates.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


The mathematical estimate of the return on a security when the market return as a whole is zero. Alpha is derived from a in the formula Ri = a + bRm which measures the return on a security (Ri) for a given return on the market (Rm) where b is beta. See also capital-asset pricing model, characteristic line.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


Alpha measures risk-adjusted return, or the actual return an equity security provides in relation to the return you would expect based on its beta. Beta measures the security's volatility in relation to its benchmark index.

If a security's actual return is higher than its beta, the security has a positive alpha, and if the return is lower it has a negative alpha.

For example, if a stock's beta is 1.5, and its benchmark gained 2%, it would be expected to gain 3% (2% x 1.5 = 0.03, or 3%). If the stock gained 4%, it would have a positive alpha.

Alpha also refers to an analyst's estimate of a stock's potential to gain value based on the rate at which the company's earnings are growing and other fundamental indicators.

For example, if a stock is assigned an alpha of 1.15, the analyst expects a 15% price increase in a year when stock prices are generally flat. One investment strategy is to look for securities with positive alphas, which indicates they may be undervalued.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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Introduction of Antifreeze Proteins (AFP) market with future development and status
"Along this line, let me assure all of you that the AFP shall remain apolitical and non partisan, just that the president continuously reminds the defense force to be neutral, we in the AFP will heed only to mandate and our loyalty remains to the flag alone," Madrigal said.
Chi-square test was used to study the significance of the association between AFP level and size of tumor.
The histological diagnosis was correlated with serum AFP levels and a significance was calculated and the role of AFP in diagnosis of paediatric liver tumours was evaluated.
AFP can inhibit the maturation and induce apoptosis of DC cells, so that cancer cells could escape the immune surveillance.
In addition, portal vein tumor thrombus (PVTT) occurred frequently in the AFP [greater than or equal to] 20 ng/ml group, while it is rarely observed in the AFP < 20 ng/ml group (14.9% versus 2.0%, P <0.001).
So far, [alpha]-fetoprotein (AFP) and imaging technology (e.g., ultrasound or computed tomography) are two primary methods to diagnose HCC in hospitals.
He also toured the AFP museum along with his nine-men delegation mostly composed of deputy commandants in major reserve training units in Malaysia.
Outside of pregnancy, the AFP test is used to detect liver disease, certain cancers, and to monitor the progress of any cancer treatment.
Genetically linked viruses were isolated in 2015; 10 AFP cases and 11 isolates were identified through community-based surveillance, with VP1 nucleotide sequence divergence up to 3.3% from the parental OPV strain.
M2 EQUITYBITES-March 4, 2016-Prudential Financial Closes Acquisition of AFP Habitat Stake