Alpha vs. Beta
Alpha measures benchmark-relative excess return, while beta measures sensitivity to broad market or systematic risk.
Portfolio-theory terms for CAPM, beta, alpha, market portfolios, and capital-market pricing lines.
CAPM, Beta, and Pricing Models terms describe portfolio theory, CAPM, beta, efficient frontiers, risk premia, volatility, exposure, and systematic versus idiosyncratic risk.
Use this branch when a model or risk concept changes how expected return, risk, diversification, beta, or portfolio efficiency is interpreted.
| Term | Use it for |
|---|---|
| Alpha vs. Beta | Expected-return, risk-premium, beta, volatility, diversification, exposure, or portfolio-theory terms. |
| Capital Market Line (CML) | CAPM, beta, efficient-frontier, risk-return, risk-premium, volatility, exposure, systematic-risk, or portfolio-theory terms. |
| CAPM | CAPM, beta, efficient-frontier, risk-return, risk-premium, volatility, exposure, systematic-risk, or portfolio-theory terms. |
| Market Portfolio | CAPM, beta, efficient-frontier, risk-return, risk-premium, volatility, exposure, systematic-risk, or portfolio-theory terms. |
| Security Market Line (SML) | CAPM, beta, efficient-frontier, risk-return, risk-premium, volatility, exposure, systematic-risk, or portfolio-theory terms. |
| Unlevered Beta | CAPM, beta, efficient-frontier, risk-return, risk-premium, volatility, exposure, systematic-risk, or portfolio-theory terms. |
| Zero-Beta Portfolio | CAPM, beta, efficient-frontier, risk-return, risk-premium, volatility, exposure, systematic-risk, or portfolio-theory terms. |
Check the model assumptions, benchmark market portfolio, beta estimate, volatility window, covariance inputs, risk premium, risk tolerance, exposure definition, and whether the model is descriptive or prescriptive.
This page is educational and does not recommend a specific portfolio, security, fund, tax treatment, or account choice.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Alpha measures benchmark-relative excess return, while beta measures sensitivity to broad market or systematic risk.
The capital market line shows combinations of the risk-free asset and the market portfolio under CAPM assumptions.
CAPM estimates expected return from the risk-free rate, market risk premium, and an asset's beta exposure.
The market portfolio is the theoretical portfolio containing all risky assets in market-value weights.
The security market line plots expected return against beta to show CAPM's required return for systematic risk.
Unlevered beta estimates an asset's market risk after removing the effect of financial leverage.
A zero-beta portfolio is constructed to have no systematic market exposure while still carrying other investment risks.