DEFINITION of 'Alpha Generator'
Any security that, when added to an existing portfolio of assets, generates excess returns or returns higher than a preselected benchmark without additional risk. An alpha generator can be any security; this includes government bonds, foreign stocks, or derivative products such as stock options and futures.
BREAKING DOWN 'Alpha Generator'
Keep in mind that alpha itself measures the returns a portfolio produces in excess of the return originally estimated by the capital asset pricing model, on a riskadjusted basis. Therefore, an alpha generator adds to portfolio returns without adding any additional risk, as measured by volatility or downside volatility. This follows modern portfolio theory in allowing investors to maximize returns while keeping a certain level of risk.

Alpha
Alpha is used in finance to represent two things: 1. a measure ... 
Excess Returns
Investment returns from a security or portfolio that exceed a ... 
Portable Alpha
A strategy in which portfolio managers separate alpha from beta ... 
Jensen's Measure
A riskadjusted performance measure that represents the average ... 
Tainted Alpha
An alpha return that cannot be attributed solely to the money ... 
RiskAdjusted Return
A concept that refines an investment's return by measuring how ...

Investing Basics
Alpha and Beta for Beginners
An indepth look at what alpha and beta are and what they measure. 
Options & Futures
Bettering Your Portfolio With Alpha And Beta
Increase your returns by creating the right balance of both these risk measures. 
Options & Futures
Adding Alpha Without Adding Risk
Learn how to generate higher returns in your portfolio while keeping the same risk profile. 
Term
Evaluating Alpha and Beta
Alpha and beta are risk ratios that investors use to calculate, compare and predict returns. 
Mutual Funds & ETFs
Total Portfolio Return, Mutual Fund Theorem and Alpha
Total Portfolio Return, Mutual Fund Theorem and Alpha 
Investing Basics
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Mutual Funds & ETFs
5 Ways To Measure Mutual Fund Risk
These statistical measurements highlight how to mitigate risk and increase rewards. 
Fundamental Analysis
How Investment Risk Is Quantified
FInancial advisors and wealth management firms use a variety of tools based in Modern portfolio theory to quantify investment risk. 
Investing
Measure Your Portfolio's Performance
Learn three ratios that will help you evaluate your investment returns. 
Investing Basics
Explaining RiskAdjusted Return
Riskadjusted return is a measurement of risk for an investment or portfolio.

Stocks with a positive alpha are considered to be underpriced ...
The correct answer is a): The riskadjusted return attempts to measure the risks taken to achieve a desired return. Alpha ... Read Answer >> 
Is alpha the best risk measure?
Read about some of the strengths and weaknesses of alpha, a popular riskadjusted performance indicator based on modern portfolio ... Read Answer >> 
Does a negative alpha automatically mean I should sell?
Learn how alpha is used to assess an investment's profitability relative to the broader market and why a negative value isn't ... Read Answer >> 
What is the Weighted Alpha formula and how is it calculated?
Find out how investors and analysts calculate the weighted alpha of a stock's price by emphasizing recent price movements ... Read Answer >> 
What is the difference between the Sharpe ratio and alpha?
Use alpha and the Sharpe ratio to evaluate mutual funds by comparing their riskadjusted returns. Learn what modern portfolio ... Read Answer >> 
What are the best technical indicators to complement Weighted Alpha?
Find out how technical analysts and traders use a stock's weighted alpha to confirm momentum or select specific stocks to ... Read Answer >>