Portable Alpha

Portable alpha is the return of an investment portfolio with zero market risk (beta). Being independent of both the direction and the magnitude of the market's movements, it represents the manager's skill in selecting investments. Elimination of the market risk can be accomplished by means of short selling and derivatives such as futures, swaps, and options.

See Alpha for a definition of alpha.

Here, Portable Alpha implies that the extra returns (alpha) can be separated from the changes of the market by hedging the market exposure of the portfolio.

The process of Portable Alpha is also sometimes referred to as Alpha Transport

Read more about Portable Alpha:  Example of Portable Alpha, Usage of A Portable Alpha Manager

Other articles related to "portable alpha, alpha":

Usage of A Portable Alpha Manager
... through use of passive investments, and use Leverage against this portfolio to invest in the portable alpha manager ... As long as the manager returns enough alpha to cover their costs of investing (interest and fees), the investor can port the excess return to his portfolio ... board might be convinced that they can circumvent this policy for a portable alpha manager who invests in commodities, because he hedges out his exposure to the commodities market ...

Famous quotes containing the words alpha and/or portable:

    Imagination is a valuable asset in business and she has a sister, Understanding, who also serves. Together they make a splendid team and business problems dissolve and the impossible is accomplished by their ministrations.... Imagination concerning the world’s wants and the individual’s needs should be the Alpha and Omega of self-education.
    Alice Foote MacDougall (1867–1945)

    “Wotever is, is right, as the young nobleman sveetly remarked wen they put him down in the pension list ‘cos his mother’s uncle’s vife’s grandfather vunce lit the king’s pipe vith a portable tinder-box.”
    Charles Dickens (1812–1870)