Alpha (financial term)

In finance, "Alpha" refers to the ability of an investment manager or strategy to generate returns that exceed a benchmark or market index. Essentially, it measures how much better (or worse) an investment performed compared to what was expected based on market movements alone. A positive alpha indicates the manager has added value through skillful decision-making, while a negative alpha suggests underperformance. Investors often look for funds with positive alpha, as it signals potential for higher returns that are not simply a result of market trends.