Break down returns in your own words
Hi everyone,
Today I was reading a note from Dalio on his well known All Weather. I stumbled upon something interesting in it: return = cash + beta + alpha, of course then Dalio explains each term in details.
What I am curious about is, to all professionals in the HF world, how would you describe each term here? I am particularly interested in how you would describe alpha.
By asking this I am curious and mainly looking for how other people would frame these concepts in their own words.
AI plus AI plus AI. That's entirely it
Risk-Free Rate + Market Return above Risk-Free Rate + Alpha (Excess Return Above Market) = Total Return
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