Alpha

Alpha represents the 'skill' component of returns—the return that cannot be explained by simply taking market risk. It is derived from the regression equation: Rp = α + β·Rm + ε. Positive alpha means the strategy generates returns beyond what its market exposure would predict. Zero alpha means returns are fully explained by market exposure. Negative alpha means the strategy destroys value relative to its risk level. At Blackworks Capital, generating consistent positive alpha relative to the S&P 500 Total Return Index is a core objective—it is the primary metric for evaluating whether active management fees are justified.