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.
INVESTOPEDIA EXPLAINS '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.

Excess Returns
Investment returns from a security or portfolio that exceed a ... 
Volatility
1. A statistical measure of the dispersion of returns for a given ... 
Alpha
1. A measure of performance on a riskadjusted basis. Alpha takes ... 
Abnormal Return
A term used to describe the returns generated by a given security ... 
Capital Asset Pricing Model  CAPM
A model that describes the relationship between risk and expected ... 
Benchmark
A standard against which the performance of a security, mutual ...

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