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 –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
- PHI ALPHA THETA INSTATES.
- Alpha University of Arkansas [Alpha] 25 April 2000: Marian E. Hendrickson, Steven Quoss, Kimberly...
- Research articles 2001-06-22
- PHI ALPHA THETA INITIATES.(Review)
- Alpha Alpha Alpha Biola University [Alpha][Alpha][Alpha] 2 March 2000: Mark D. Baesel; 29 March 2000: Jeffrey D. Leary; 13 April 2000: Daniel J. Price, Stephanie D. Schnorbus. Alpha Alpha Beta Saint Francis College ...
- Research articles 2000-09-22
- Fund Manager Stats
- Never mind ranking mutual funds while developing a scorecard for fund managers. The article talks about rating portfolio managers with alpha rankings. Alpha helps to measure whether a manager is adding value to a client's diversified portfolio. Alpha analysis enables to see the value added by a manager in relation...
- White papers 2003-01-01
- 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
- 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
- PHI ALPHA THETA INITIATES.
- Alpha Alpha Lehigh University AA 27 April 2000: Jessica N. Engel, William C. Fritchie,...
- Research articles 2001-01-01
- Assessing Your Need for a Credit Rating
- A credit assessment/ rating provides an independent third-party view of the likelihood that your organization’s bonds will be repaid in full and on time. A rating is most likely to lower your cost of capital if it is an investment-grade rating. This paper looks into the prospective of credit rating...
- White papers 2002-03-11
- PHI ALPHA THETA INITIATES.(Review)
- Alpha Alpha Lehigh University AA 21 April 1998: Philip S. Adelman, Andrew William Conner, Jill Ann Kinney, Nathan Kmieciak, Sara E. Nowlin, Melissa A. Poole, Karyn Richman. Alpha Alpha Epsilon Kennesaw State University AAE 5 June...
- Research articles 1999-01-01
- 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
- A.M. Best Company Issues Notification of Rating Descriptor Change
- OLDWICK, N.J. -- Effective January 2, 2007, A.M. Best Company is changing the Financial Strength Rating Descriptor for B++ and B+ ratings on insurance companies. The reason for the changes is to make the Rating Descriptor consistent with the existing Rating Definition across all rating categories.
- Research articles 2006-12-28
- S&P: 'AAA' Rating to Oracle Alpha SPC's Y30 Bil. ABS
- TOKYO--BUSINESS WIRE--Standard & Poor's--
- Research articles 1999-08-12
- 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
- Comparative Rating for the Insurance Industry
- CGI has opened up the independent comparative rating market with a single rating source and rating service that benefits insurance companies, comparative rating firms, independent agents and customers. Rating algorithms at insurance companies are no longer only for batch processing or online quoting directly by their own agents. They can...
- White papers 2004-08-05
- Moore's 'Fahrenheit' to keep its R rating
- Fahrenheit 9/11 , Michael Moore's incendiary documentary about President George Bush, will be released today with an R rating. Distributors tried Tuesday to get the rating reduced to PG-13. An R rating means those under 17 must be accompanied by an adult. But a Motion Picture Association of America...
- Research articles 2004-06-23
- PHI ALPHA THETA INITIATES.
- Alpha Alpha Alpha Biola University AAA 18 November 1999: Travis L. Blagg, Jene D. James. Alpha Alpha Epsilon...
- Research articles 2000-03-22
- Rating the rating agencies.(evaluation of credit rating)
- Credit rating firms are overly trusted in rating debt and should be more standardized. The SEC will decide in late 1995 whether to continue its national recognition policy that allows credit firms to publish debt ratings. Some foreign credit firms are fighting for this privilege.IN THEORY, anyone can produce a...
- Research articles 1995-07-15
- Fitch Places CenturyTel on Rating Watch Negative
- CHICAGO -- Fitch Ratings has placed CenturyTel, Inc.'s CenturyTel 'BBB' issuer default rating IDR and senior unsecured debt rating and 'F2' commercial paper rating on Rating Watch Negative.
- Research articles 2006-12-18
- PHI ALPHA THETA INITIATES.(Review)(Brief Article)
- Alpha Alpha Lehigh University 6 April 1999: Eric A. Clement, Terry A. Cooper, Sara Director, Timothy Doherty, Michael Lawrence Edelman, Molly E. Egan, Matthew E. Haynes, Tammy E. Henderson, Jason Hochstadt, Timothy L. Johnson, R. Quinn Kurtz, Charlstie Anne Laytin, Darren Magarro, Joseph A....
- Research articles 1999-09-22
- The Alpha legacy: A brief history
- Michigan Chronicle 08-05-2003 Since being founded on Dec. 4, 1906, Alpha Phi Alpha Fraternity Inc. has supplied voice and vision to the struggle of African Americans and other people of color around the world. Alpha Phi Alpha, the first intercollegiate Greek-letter fraternity...
- Research articles 2003-08-05
