Tag
#beta
4 articles
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What Is Alpha in Investing? Return Beyond the Benchmark, Explained
Alpha is the return a portfolio earned beyond what its benchmark exposure and risk already explain. It is a residual, and it depends entirely on the benchmark chosen.
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What Is Beta in Investing? Sensitivity to the Market, Explained
Beta measures how much a stock or portfolio tends to move when the market moves. It is estimated by regression against an index and is routinely misread as a quality score.
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What Is R-Squared in Investing? How Much of a Portfolio the Benchmark Explains
R-squared measures what share of a portfolio's return movement is explained by its benchmark. It runs from zero to one and decides whether alpha and beta mean anything.
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What Is the Treynor Ratio? Excess Return per Unit of Market Risk
The Treynor ratio divides excess return by beta rather than by total volatility, so it measures reward per unit of market risk alone. Useful for portfolios held inside a larger whole.
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