DEFINITION of 'Portable Alpha'
A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index from which their beta is derived. Alpha is the return achieved over and above the return that results from the correlation between the portfolio and the market (beta). In simple terms, portable alpha is a strategy that involves investing in areas that have little to no correlation with the market.
BREAKING DOWN 'Portable Alpha'
Portfolio return is based on two aspects. The first is beta, which is the extent to which an investment vehicle moves with the market and can be said to represent passive returns, which occur as a result of an increase along with the overall market. The second is alpha, which is a measure of a manager's ability to generate returns by choosing stocks or other investments that will outperform the market in a given time period, and can be said to represent the returns generated by activemanagement techniques.
If a portfolio manager can improve alpha by investing in securities that are not correlated with the beta of an existing portfolio, that manager will have created a portable alpha.

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Term
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Alpha and beta are risk ratios that investors use to calculate, compare and predict returns. 
Options & Futures
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Increase your returns by creating the right balance of both these risk measures. 
Mutual Funds & ETFs
Beta
Beta 
Professionals
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Fundamental Analysis
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Mutual Funds & ETFs
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What's the difference between alpha and beta?
Learn about alpha and beta, two very important technical risk ratios that investors use to evaluate relative performance, ... Read Answer >> 
How can I use alpha in conjunction with the Treynor Ratio?
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Does a negative alpha automatically mean I should sell?
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Is alpha the best risk measure?
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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 >> 
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 >>