Understanding Alpha and Beta | Alpha vs Beta in Investing - TipRanks

What do the terms alpha and beta mean in investing?

Hi, this is Danielle from TipRanks, and in today’s Investing Basics, we’re going to look at the terms Alpha and beta.

We’ll explain what these terms mean and how the TipRanks Smart Portfolio can help you understand the Alpha and beta of your investments.
Alpha and beta offer different ways to evaluate the performance of a stock, fund, or portfolio.

Alpha describes an investment’s performance when compared to a benchmark such as the S&P 500.

The term is often used to describe an investment strategy’s ability to beat the market. If you hear the phrase – “alpha beating strategy”, this means that historically this strategy has beaten a benchmark.

For example, TipRanks has a stock research tool that uses the informative Buy trades of corporate insiders to help investors search for stocks. It offers “alpha beating strategies” based on insider transactions.

An alpha of 1 means an investment has outperformed its benchmark index by 1%. An alpha of minus 1 means the investment has underperformed by 1%. If the alpha is zero, its return has matched the benchmark.

Beta on the other hand is a measurement of risk and volatility in comparison to a benchmark such as the S&P 500.

An investment with a beta of 1 has almost identical price activity to the benchmark. An investment with a beta above 1 is more volatile than the market. An investment with a Beta below 1 is less volatile than the market. An investment with a negative beta is inversely correlated to the stock market.

When you use TipRanks Smart Portfolio you will see a full analysis of your portfolio, including the beta of your portfolio, as well as the average beta of other investors, including the top performers. It also shows you your most volatile stocks and their beta.

You can also see how your portfolio compares to the S&P 500 on a monthly basis.

If you haven’t yet opened a TipRanks Smart Portfolio, give it a go now, and let us know what you think in the comments.

#stocks #TipRanks #alphaandbeta

[biggering]

Thanks for getting straight to the point. So many other videos out there take 10+ minutes to explain the same.

[laurarodgers]

Thanks for your informational videos! Please review aqst soon! AQST has been trending up and I’d love to hear too ranks analysis on it!

[willmallory]

Thanks for sharing. Do you have your own channel?

[zvishapiro]

The music interferes and makes it hard to understand the speech

[delliott]

Awesome. Do you have your own YT channel?

[fernandezscott]

Trading bitcoins is the best thing that has happened to me in my life, it really works, it's so painful that I didn't get into it in time, thanks to Maria Lopez trading. I couldn't have gotten this far without your help.