Alpha

Alpha (the Greek letter α) is a term used in investing to describe a strategy’s ability to beat the market, or it’s edge. Alpha is thus also often referred to as “excess return” or “abnormal rate of return,” which refers to the idea that markets are efficient, and so there is no way to systematically earn returns that exceed the broad market as a whole. Alpha is often used in conjunction with beta (the Greek letter β) , which measures the broad market’s overall volatility or risk, known as systematic market risk.