Evaluation Of Portfolio Against The Benchmark

Asset Vantage28 Apr, 2023Business

portfolio comparison against the benchmark is an important method used by investors to evaluate the performance of their investment portfolio. The benchmark is typically a market index, such as the S&P 500 or the Dow Jones Industrial Average, which represents the overall performance of a specific market or sector. The portfolio is compared to the benchmark by analysing the returns and risk of the portfolio over a specified period of time. If the portfolio has outperformed the benchmark, it is considered to have generated alpha, which is the excess return earned over the benchmark. If the portfolio has underperformed the benchmark, it is considered to have generated negative alpha.