Glossary / Relative performance
Alpha
Alpha is the part of a return that is not explained by the benchmark's move over the same period — the difference between what a holding did and what its benchmark did while it was held. In its stricter form the benchmark's contribution is scaled by beta before the subtraction.
How it is measured
How is alpha measured?
Measure the return over a defined window. Measure the benchmark's return over that identical window. Subtract. The stricter version multiplies the benchmark return by the holding's beta first, so that a security which simply moves more than the market is not credited for the extra movement. Both the window and the benchmark are choices, and changing either changes the answer.
Why it matters
Why does alpha matter to a swing trader?
Alpha is the vocabulary for 'did this do anything the market did not already do', which is the only version of the question that survives a market-wide move up or down. The measurement caution for a swing trader is that alpha over a single short window is mostly noise — one session's difference against a benchmark tells you almost nothing, and the number stabilises only across a large sample.
In Tapeline
Does Tapeline use alpha?
Tapeline's public scorecard records each daily top-10 pick's realised next-session return alongside the benchmark's over the same session, with the sample size disclosed and losing days published unedited.
Tapeline publishes the six factor names and the ordering of their weights. The numeric weights, the scoring equation and the band edges are not published.
Related
See this in the product
The public scorecard record · Full methodology
Related terms
Back to the full glossary.
General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.