Alpha/Beta Analysis

What it means: Alpha shows performance above the benchmark; Beta shows how linked your investment is to the market’s movements.

In plain terms: Alpha = skill, Beta = sensitivity.

Example:

• If your Beta is 1.0, your investment moves with the market.
• If Beta is 2.0, it doubles market moves, riskier.
• If Alpha is positive, you’re doing better than what Beta predicts.

Bonds vs Equities vs Crypto:

• Bonds: Often low Beta and small Alpha.
• Equities: Can have varied Alpha/Beta, depending on strategy.
• Crypto: Typically high Beta, moves way more than traditional markets.

How to use it: This duo is best together, Beta helps you understand exposure to market risk, while Alpha measures the extra skill (or luck) on top. A high Beta and negative Alpha indicate risk-taking without reward. Consistent positive Alpha is a sign your strategy is working. Re-evaluate if Alpha turns persistently negative.