A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market. A high value for alpha implies that the stock or mutual fund has performed better than would have been expected given its beta (volatility).

Use alpha in a sentence

You should try and think of things using an alpha approach so that you are weighing the risk vs the reward.

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I feel like this stock is a safer investment than the other stock I was considering because it has a higher alpha value.

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I was learning about coefficients and then I came across something called the alpha, which talked about risk adjusted performance.

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weighted alpha modern portfolio theory