Where it is

ScreenMarketplace, Strategy, PortfolioAdvanced

Alpha shows in Advanced: on Marketplace cards and in the key figures of a strategy page and of a portfolio.

Indices in this video: Allcap (strategy page) and Large Cap Multi Asset (the sample portfolio).

What it means

Alpha here means how far ahead of or behind its benchmark something is, but the two places measure it differently. The card uses total return points over the full history. The key figure uses growth per year over the chosen period; on a portfolio it is worked out the same way from the portfolio's own weekly value, and reads n/a until there is a year of it. 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, over the full history. Key figure: growth per year minus the benchmark's growth per year, over the chosen period, on a strategy and on a portfolio.

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)
On a portfolio the same rule reads its own weekly value; n/a under 1 year

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
  • A portfolio 4 months old: alpha n/a until it has a year

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; a young portfolio shows n/a.
  • The learn module teaches Jensen alpha; the app shows it only in the Risk tab.

Transcript

Tap Sound on for voice and music. These are the captions of the video, chapter by chapter.

  1. 0:00Where it is. Card alpha: total return gap over the full history.
  2. 0:21What it means. A portfolio's alpha is the same per year gap, from your own value.
  3. 0:46Worked 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. A portfolio 4 months old: alpha n/a until it has a year.
  4. 0:52How 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. 0:58Watch 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; a young portfolio shows n/a. The learn module teaches Jensen alpha; the app shows it only in the Risk tab.

Terms in this tutorial

  • alphaHow far a return was ahead of or behind its benchmark.
  • betaSensitivity of a portfolio to the market.
  • CAGRCompound Annual Growth Rate.

Learn it in depth