Alpha, Information Ratio, and Tracking Error

Alpha and tracking pages explain how investors judge active return relative to a benchmark and the risk taken to seek it.

This subsection keeps active-management performance terms together.

In this section

• Alpha Generation: Achieving Superior Investment Returns
  Alpha generation refers to the ability to achieve investment returns exceeding a market index's benchmark return, adjusted for risk.
• Alpha: Measure of Investment Performance Relative to a Benchmark Index
  Alpha represents an investment's performance relative to a benchmark index, indicating the active return on investment compared to the market.
• Information Ratio (IR): Definition, Formula, Benefits, and Comparison with the Sharpe Ratio
  A comprehensive guide to understanding the Information Ratio (IR), its formula, benefits, how it differs from the Sharpe Ratio, and its application in portfolio management.
• Jensen''s Alpha: A Key Performance Metric in Investment Management
  Jensen's Alpha is a metric that evaluates a portfolio's return above the expected return predicted by the Capital Asset Pricing Model (CAPM).
• Tracking Error: Definition, Influencing Factors, and Example
  Understanding the concept of tracking error, the factors that influence it, and an illustrative example to solidify comprehension.