I'm considering investing in a fund or stock with a negative alpha, but I'm not sure if it's a good purchase. I want to understand if a negative alpha indicates a poor investment or if there are situations where it could be beneficial.
7 answers
CosmicDream
Wed Nov 27 2024
A security with a negative alpha is not generating returns at the same rate as its counterparts.
CryptoChieftain
Wed Nov 27 2024
An alpha that is positive signifies that a security is surpassing the market's performance.
CryptoKnight
Wed Nov 27 2024
Investors often use alpha as a tool to gauge the effectiveness of their investments.
KpopMelody
Wed Nov 27 2024
This metric serves as an indication of how well a security is doing compared to its peers.
Isabella
Wed Nov 27 2024
A negative alpha can be a red flag, suggesting that a stock might not be the best choice.