In finance, "alpha" refers to a measure of an investment's performance compared to a benchmark index, after accounting for the risk taken. It indicates how much the investment outperforms or underperforms the benchmark.
Jensen's Alpha (a type of alpha) of a portfolio. It calculates the excess returns by subtracting the benchmark returns from the portfolio returns and then calculates the alpha using the Capital Asset Pricing Model (CAPM) approach. Finally, it interprets the alpha based on whether it's positive, negative, or zero.