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Alpha Equation

Posted By: TradersLog

The alpha equation of a fund is as follows:

[ (sum of y) -((b)(sum of x)) ] / n

where: n =number of observations (36-60 months)

b = beta of the fund

x = rate of return for the S&P 500, or another benchmark index

y = rate of return for the fund

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Categories Definitions, Quantitative Definitions | Tags: Hedge Fund

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