BNET Business Dictionary
Business Definition for: Alpha Rating
- the return a security or a portfolio would be expected to earn if the market's rate of return were zero. Alpha expresses the difference between the return expected from a stock or mutual fund, given its beta rating, and the return actually produced. A stock or trust that returns more than its beta would predict has a positive alpha, while one that returns less than the amount predicted by beta has a negative alpha. A large positive alpha indicates a strong performance, while a large negative alpha indicates a dismal performance.
To begin with, the market itself is assigned a beta of 1.0. If a stock or trust has a beta of 1.2, this means its price is likely to rise or fall by 12% when the overall market rises or falls by 10%; a beta of 7.0 means the stock or trust price is likely to move up or down at 70% of the level of the market change.
In practice, an alpha of 0.4 means the stock or trust in question outperformed the market-based return estimate by 0.4%. An alpha of â€"0.6 means the return was 0.6% less than would have been predicted from the change in the market alone.
Both alpha and beta should be readily available upon request from investment firms, because the figures appear in standard performance reports. It is always best to ask for them, because calculating a stock's alpha rating requires first knowing a stock's beta rating, and beta calculations can involve mathematical complexities.
- See also Beta Rating
Additional Resources
- S&P Assigns 'BBB-' CP rating to Alpha Credit Bank
- LONDON--BUSINESS WIRE--Standard & Poor's CreditWire 12/19/97 -- Standard & Poor's today assigned its triple -`B' - minus long-term counterparty rating and `A-3' short-term counterparty rating to Alpha Credit Bank A. E. Alpha. The long-term rating outlook is stable. The foreign currency counterparty rating is equivalent to Hellenic...
- Research articles 1997-12-19
- S&P Rates Alpha Wind 2000-A Ltd.'s $90M Securities
- Business Editors NEW YORK--BUSINESS WIRE--Standard & Poor's June 13, 2000-- Standard & Poor's assigned its double-'B'-plus rating to Alpha Wind 2000-A Ltd.'s Alpha Wind $52.5 million notes, which are due May 23, 2001. At the same time, Standard & Poor's assigned its double-'B' rating to Alpha Wind's...
- Research articles 2000-06-13
- Rehmann Financial's Alpha Quant Portfolio Earns Five Star Rating from Morningstar
- GRAND RAPIDS, Mich. -- Rehmann Financial, a member of The Rehmann Group, is pleased to announce that Rehmann Financial's Alpha Quant Portfolio earned a five star rating with Morningstar.
- Research articles 2007-02-27
- Princeton Securities Corp. Initiates Research Coverage of Alpha Microsystems With a Long Term Buy Rating
- PRINCETON, N.J.--BUSINESS WIRE--June 15, 1998--Princeton Securities Corp. issues a report on Alpha Microsystems (NMS:ALMI) with a long term buy rating. The report dated June 15, 1998 will be available by calling Princeton Securities Corp. at 800/332-2888. CONTACT: Princeton Securities Corp. ...
- Research articles 1998-06-15
- Visa Alpha Business Sinks FIBI Rating.(Brief Article)
- Goldman Sachs canceled its "buy" recommendation for the shares of First International Bank of Israel FIBI because of continuing heavy losses that the bank is absorbing due to its investment in Visa Alpha Credit Cards. Goldman Sachs said i Goldman Sachs canceled its "buy" recommendation for...
- Research articles 1999-11-01
- Alpha Property & Casualty Insurance Rated 'Api' by S&P
- NEW YORK--BUSINESS WIRE--Standard & Poor's CreditWire 8/19/98 - Standard & Poor's today assigned its single-'Api' insurer financial strength rating to Alpha Property & Casualty Insurance Co.
- Research articles 1998-08-19
- Alpha Wire. (Component Spotlight: Cables and Connectors).
- Alpha Wire's Industrial Series Cable is among the first to receive a UL Open Wiring Rating and offers a range of such solutions. Series F and Series M cable are approved in their entirety, along with particular Series L cable and the new Series V High Performance,...
- Research articles 2003-03-01
- 'Tension-Raising' Low Sovereign Rating of Turkey
- Some time has passed since I wrote an article about the severe errors in judgment on the part of credit rating agencies, specifically relating to Turkish sovereign debt. One of the reasons why I decided to submit the Turkish sovereign ratings article to Seeking Alpha six months ago was...
- External links 2009-06-28
- New offers: we examine what the latest savings and investment plans have to offer investors. Each product has been given a star rating, representing its overall value for money, based on cost, terms and conditions and investment opportunity
- * Britannic Asset Management Britannic Asset Management--which will be renamed Resolution Asset Management in May 2006--has launched the Britannic Argonaut European Income fund. The new fund, which Britannic claims is one of the first true equity income funds in the European sector, will be managed by Oliver Russ. ...
- Research articles 2006-03-01
- Rating Agencies Won't Be Able to Shut CalPers Up Easily
- Seldom do I write a blog or post, merely because those on Seeking Alpha do such a splendid job of covering all the bases. However, the fact that CalPers has sued Moody's MCO, Fitch, and Standard & Poor for providing perfect triple AAA credit ratings on junk, close to when...
- External links 2009-07-16
- MGIC Investment Corporation Q3 2007 Earnings Call Transcript
- Question-and-Answer Session Operator Thank you. [Operator Instructions] Our first question comes from Howard Shapiro. Howard Shapiro - Fox-Pitt Kelton Hi, a couple of questions. Given your new loss guidance for 2008, have you had any discussions with the rating agencies, are they still comfortable with...
- Earnings calls 2007-10-18
- ACE Limited Q3 2007 Earnings Call Transcript
- Question-and-Answer Session Operator Ladies and gentlemen our question and answer session is conducted electronically. [Operator Instructions]. We will go first to Josh Smith with CREF. Josh Smith - TIAA-CREF Hello, can you hear me? Evan G. Greenberg - Chairman and Chief Executive Officer...
- Earnings calls 2007-10-24
- Conducting Effective Performance Appraisals
- People frequently appraise others and their performance. When chatting over coffee, it's natural to talk about what other people have accomplished, and how effectively they've done it. But these informal conversations are generally based upon perception . They're subjective and unreliable. Performance appraisals seek to redress this imbalance by making...
- Articles 2007-10-31
- Hellenic Telecommunications Organization SA Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. [Operator instruction]. Your first question comes from Terrence Sinclair of Citi. Please ask your question. Terrence Sinclair - Citigroup Good afternoon, good evening. I have got a couple of questions. One relates to Cosmote and one relates to the ownership of OTE....
- Earnings calls 2007-11-28
- Telefonica SA Q3 2007 Earnings Call Transcript
- Question-and-Answer Session Operator [Operator Instructions]. The first question comes from the line of Damien Maltarp [Cazenove]. Please go ahead with your question. Damien Maltarp - Cazenove Thanks very much, Damien Malta from Cazenove. Two questions, firstly just on the restructuring provision that you guided for the...
- Earnings calls 2007-11-12
- Moody's Corp. Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. [Operator Instructions]. We'll go to first to Peter Appert at Goldman Sachs. Peter Appert - Goldman Sachs Thank you, hey Ray can you give us any additional color on what this restructuring charge might look like in the fourth quarter in terms...
- Earnings calls 2007-10-25
- Ryder System, Inc. Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. [Operator Instructions]. Our first question comes from Jon Langenfeld. You may ask your question and please state your company name. Jon Langenfeld - Baird Robert. W. Baird. Good morning. Gregory T. Swienton - Chairman and Chief Executive Officer Good morning....
- Earnings calls 2007-10-25
- Everest Re Group, Ltd Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. [Operator Instructions]. And we will go to Tom Cholnoky with Goldman Sachs. Thomas V. Cholnoky - Goldman Sachs Hi. Good morning everyone. I have three questions, if I can. I know you didn't want get too much into the asbestos study, but...
- Earnings calls 2007-10-23
- CanWest Global Communications F1Q08 (Qtr End 11/30/07) Earnings Call Transcript
- Question-and-Answer SessionOperator Operator Instructions Your first question comes from Carl Bayard - Genuity Capital Markets. Carl Bayard – Genuity Capital Markets Couple of questions. First off, a question for John Maguire. I was just wondering if you have an estimate of what the clean EPS number would be if...
- Earnings calls 2008-01-10
- The Chubb Corporation Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. The question-and-answer session will be conducted electronically. [Operator Instructions]. And we'll take our first question from Jay Gelb [Lehman Brothers]. Jay Gelb - Lehman Brothers Thank you. The fires you are most focused on the California and that one a little fast....
- Earnings calls 2007-10-24
