What is alpha
what is beta
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Answers
Alpha and beta is a method of storing quantities just like x and y
Alpha measures the performance of an asset manager. It measures the efforts put in by a fund manager in driving the fund that he or she is managing as against a benchmark index. Alpha’s baseline is 0 in case of mutual funds. If alpha is negative, then it indicates that the performance of the fund manager was underwhelming. If alpha is positive, then it suggests that the fund manager’s performance was overwhelming. Generally, the performance of a mutual fund is compared with that of an index .
And
Beta is a measure of variations showed by a mutual fund when there is a fluctuation in a benchmark index. In simple words, beta is a measure of the sensitivity shown by a mutual fund to a movement in a benchmark index. Beta can be used to check how stable a mutual fund was when the markets were volatile.
Beta’s baseline is 1 in case of mutual funds. If beta is 1, then it indicates that the mutual fund is showing the same variation as that of the benchmark index. If it is more than 1, then it suggests that the value of the fund changes in a much-pronounced manner when compared to the benchmark. If beta is less than 1, then it means that the variation in the fund value is lesser when compared to the benchmark index.