afterworkguinness
Active Member
Hi,
I hate to ask such an opened ended unspecific question, but I'm rather lost by this topic (Explain the relationship between risk and alpha in hedge funds). Reading the source and the Fung, Hsieh paper didn't help clarify.
#1 I thought the relationship between risk and alpha was pretty cut and dry - alpha is a risk based performance measure that tells you how much a portfolio or stock is returning over the benchmark using Beta (systematic risk) for risk. What else is there to the relationship ?
#2 This statement is quite confusing, as again, isn't alpha a risk adjusted performance measure?
"While there may be alpha in hedge funds, there is also more risk."
#3 This is a lot to ask, and I understand if it's skipped in replies, but can someone summarize for me what the purpose is behind the eight factor model?
I'm really counting on you here BT community, I know you'll come through for me
Thanks very much in advance.
I hate to ask such an opened ended unspecific question, but I'm rather lost by this topic (Explain the relationship between risk and alpha in hedge funds). Reading the source and the Fung, Hsieh paper didn't help clarify.
#1 I thought the relationship between risk and alpha was pretty cut and dry - alpha is a risk based performance measure that tells you how much a portfolio or stock is returning over the benchmark using Beta (systematic risk) for risk. What else is there to the relationship ?
#2 This statement is quite confusing, as again, isn't alpha a risk adjusted performance measure?
"While there may be alpha in hedge funds, there is also more risk."
#3 This is a lot to ask, and I understand if it's skipped in replies, but can someone summarize for me what the purpose is behind the eight factor model?
I'm really counting on you here BT community, I know you'll come through for me
Thanks very much in advance.
