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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.


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.


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.


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.

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Alpha-blockers have the potential to increase the risk of falls in the elderly (American Geriatrics Society 2012 Beers Criteria Update Expert Panel, 2012).
So, they require blood pressure monitoring and dose adjustments, but they're as effective as selective alpha-blockers and may be less costly.
The only side effects described were 2 episodes of hypotension in the alpha-blocker alone group.
These responses are likely how alpha-blockers assist in ureteral stone passage.
8,10) Overall, the THZD-based therapy was superior to the alpha-blocker, ACEI, and CCB-based therapies in preventing 1 or more major forms of CVD, including stroke and heart failure (HF).
Patients with LUTS associated with prostatic enlargement may be offered a combination of an alpha-blocker and a 5-ARI, which has been shown to delay symptomatic disease progression, AUR and prostate surgery compared with either therapy alone.
The AUA cautions that men should not start alpha-blocker therapy until after the operation, and should inform their ophthalmologists about alpha-blocker use.
In the 42,418-patient ALLHAT, researchers compared four types of antihypertensive drugs: the alpha-blocker doxazosin, the diuretic chlorthalidone, the ACE-inhibitor lisinopril, and the calcium channel blocker amlodipine.