In finance, the term "alpha" refers to a measure of an investment's performance relative to a benchmark index, such as the S&P 500. It represents the excess return of an investment compared to the return predicted by its beta (volatility) against the market. A positive alpha indicates that the investment has outperformed the market, while a negative alpha suggests underperformance. It's used by investors to assess the skill of a fund manager or to evaluate the effectiveness of a particular investment strategy.
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