Where it is

ScreenMarketplace, Strategy, PortfolioAdvanced

Alpha shows in Advanced: on Marketplace cards, in the strategy key figures and as "Your alpha" on a portfolio.

What it means

Alpha here means how far ahead of or behind its benchmark something is, but the three places measure it differently. The card uses total return points over the full history. The strategy key figure uses growth per year over the chosen period. "Your alpha" on a portfolio uses return points since you invested. None of these is a regression alpha; that one is "Jensen alpha per year" in the Risk tab.

The formula

Card: net return minus benchmark return. Key figure: growth per year minus benchmark growth per year. Portfolio: your return minus the benchmark's since you invested.

As computed in the RupeeCase app
Card alpha = net total return - benchmark total return (points, full history)
Key figure alpha = growth per year - benchmark growth per year (chosen period, 1 year or more)
Your alpha = your return - benchmark return since you invested (points)

Worked example

Example only

  • Model +300% total, benchmark +60%: card alpha +240 points
  • Model 30% a year, benchmark 10% a year: key alpha +20 points a year
  • You +6%, benchmark +4% since you invested: your alpha +2 points

How to read it

  • First check which screen you are on, then read the number.
  • A total return gap grows with time; a per year gap does not.
  • Positive means ahead of the benchmark over that span.

Watch out

  • The same word shows different numbers: on Allcap the card and key figure differ widely.
  • The benchmark is a price index with no costs.
  • The learn module teaches Jensen alpha; the app shows it only in the Risk tab.

Transcript

The video has no sound. These are its on screen captions, chapter by chapter.

  1. 0:00Where it is. Card alpha: total return gap over the full history.
  2. 0:21What it means. Your alpha: your return gap, in points, since you invested.
  3. 0:36Worked example. Worked example, example only: Model +300% total, benchmark +60%: card alpha +240 points. Model 30% a year, benchmark 10% a year: key alpha +20 points a year. You +6%, benchmark +4% since you invested: your alpha +2 points.
  4. 0:42How to read it. How to read it: First check which screen you are on, then read the number. A total return gap grows with time; a per year gap does not. Positive means ahead of the benchmark over that span.
  5. 0:48Watch out. Watch out: The same word shows different numbers: on Allcap the card and key figure differ widely. The benchmark is a price index with no costs. The learn module teaches Jensen alpha; the app shows it only in the Risk tab.

Terms in this tutorial

  • alphaReturn above what a benchmark would deliver.
  • betaSensitivity of a portfolio to the market.
  • CAGRCompound Annual Growth Rate.

Learn it in depth