Alpha is a measure of active return on an investment, i.e. the performance of that investment compared to a suitable market index. On the other hand, Investopedia defined alpha as a measure of performance on a risk-adjusted basis. Alpha is also often used as a synonym for leader.
As Wikipedia) interprets Alpha, its value of 1 means the investment's return on investment over a selected period of time was 1% better than the market during that same period, an alpha of –1 means the investment underperformed the market.
Values of alpha for GOOG as of September 1, 2015:
- α (average alpha) = 0.07
- β (beta) = 0.52
- Risk Adjusted Performance = (0.01)
- Jensen Alpha = 0.2773
- Total Risk Alpha = 0.436