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In the context of investing, alpha is excess returns earned by an investment, above the benchmark.

For example, an active portfolio of large-cap US stocks may use the S&P 500 as a benchmark. If the portfolio outperforms the S&P 500 over a period, then the portfolio achieved a positive alpha. Portfolio managers may be judged by the alpha they generate.

Related Links

Bankrate's article: What is alpha?

Investopedia article on alpha