what is alpha
Alpha is one of five technical risk ratios; the others are beta, standard deviation, R-squared, and the Sharpe ratio. These are all statistical measurements used in modern portfolio theory (MPT) . All of these indicators are intended to help investors determine the risk-return profile of a mutual fund.ne such consideration is that alpha is used in the analysis of a wide variety of fund and portfolio types. Because the same term can apply to investments of such differing natures, there is a tendency for people to attempt to use alpha values to compare different kinds funds or portfolios with one another.