An investment’s return in excess of the market’s return over a specific period of time. Quantifies the investment’s ability to beat the market, as measured by a particular index or benchmark. Alpha can be positive, indicating that the investment added value on top of the market’s return, or negative, indicating that the strategy detracted value from the market’s return. Simply calculated by subtracting the market’s return (as proxied by an index) from the investment’s return over the applicable period of time. More complex measures of alpha that adjust for the riskiness of the investment relative to the riskiness of the market can also be calculated.