The Alpha Rating is derived through a comprehensive monthly assessment of the market. It involves screening and evaluating various investment options to identify those that consistently outperform their benchmarks. The process begins by analysing historical data and performance metrics of different securities or investment vehicles.
To calculate the Alpha Rating, the returns of the selected investments are compared to a suitable benchmark, such as S&P-500 or a specific sector index. This comparison helps determine the excess returns generated by the investments above what would be expected based on the overall market performance. These excess returns are commonly referred to as “alpha.”
The calculation takes into account the consistency of the investment’s outperformance over time. Investments that consistently outperform the benchmark month after month are given higher Alpha Ratings, as they demonstrate a higher level of reliability in delivering above-average returns.
The Alpha Rating system is particularly beneficial for investors with long-term investment goals, as it helps identify investments that have a proven track record of sustained outperformance. By utilizing the Alpha Ratings, investors can discover and prioritize investments that exhibit the potential for long-term growth and profitability.