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A popular Wendy's commercial in the 80s made famous the question: "Where's the beef?" Good one. And here's an even better one: "Where's the alpha?" You might want to whip this one out the next time you meet with your portfolio manager.
Alpha is the over-and-above-the-expected return. It is the "value added." Therefore, it makes sense that a positive alpha means an investment has outperformed its market-predicted return, while a negative alpha would mean just the opposite. The expected return is calculated by a formula that takes into account the investment's level of unavoidable risk (aka beta).
Ever stepped into an elevator and after the doors close you become aware of an almost-suffocating scent coming from the woman next to you who must have bathed in perfume? Well, as you know, once the doors close you can't escape the smell until the ride is over. This is similar to beta, which is risk that can't be reduced or diversified away. A measure of "systematic" or market related risk, beta is used as a measure relative to a certain index -- such as the S&P 500.
So, for example, let¿s say your portfolio is managed to compete against the S&P 500. If you generate a better return than the index while not taking on added risk (standard deviation of returns) then you get alpha. Low beta means the market-related risk is low and vice versa for high beta.
Another example, let's say a mutual fund or stock has a beta of 1.5 relative to the S&
P500 ¿ that means it is 1.5 times as risky. So, over time, if the S&P 500 goes up 1%, your portfolio should be up 1.5%
plus (one can hope) some percentage of alpha. If the S&P 500 is down 1%, your portfolio should be down 1.5%.
Alpha
and beta are based off of linear regression of a set of data. Warning: this may cause a high school fifth-period flashback,
but it will be over before you know it:
The equation for a line is Y = a + bX.
a = alpha (the Y intercept - the added
value)
b = Beta (the coefficient you multiply X by)
X = S&P 500 (in this case)
Y = your portfolio
Home / Markets / Industries / Industrials
Wednesday, May 07, 2008
Con-way Truckload Lowers Top Speed of Fleet in Enterprise-Wide Sustainability Initiative
Comtex
JOPLIN, MO, May 07, 2008 (MARKET WIRE via COMTEX News Network) ----Con-way Truckload, a nationwide full-truckload freight transportation company, today announced that it has reduced the maximum governed speed of its 2,700-tractor fleet from 70 to 65 mph in support of an enterprise-wide sustainability initiative at parent company Con-way Inc. (NYSE: CNW).
By adjusting its fleet to run at the lower maximum highway speed, the company expects to save 2.8 million gallons of diesel fuel per year, while reducing annual carbon emissions by approximately 62 million pounds. The savings represent the equivalent of removing 6,300 passenger cars from America's highways.
"Lowering our speed governors is a major step for us, and one of many that we're taking toward conserving fuel and supporting Con-way's enterprise-wide sustainability initiative," said Herb Schmidt, president, Con-way Truckload. "We're always looking for new ways to reduce carbon emissions and our impact on the environment, while maintaining profitability for our stakeholders and the same top-notch service our customers expect."
Since 2005, Con-way Truckload has been a member of the Environmental Protection Agency's (EPA) SmartWay Transport Partnership. SmartWay Transport is a voluntary partnership between EPA and freight industry businesses aimed at reducing greenhouse gas emissions and fuel consumption. Through it, the agency expects to cut carbon dioxide emissions by 33 to 66 million metric tons and nitrogen oxide emissions by up to 200,000 tons by the year 2012, while saving 150 million barrels of oil annually.
In addition to reducing the maximum speed of its fleet, Con-way Truckload has invested in new technologies and practices in an ongoing effort to reduce its impact on the environment, including:
-- Switching to fuel-efficient single wide-base tires on all tractors for a savings of .2 miles per gallon, with all trailers to follow by the end of 2012 -- Using special engine and drive train lubricants to increase operating efficiency -- Lowering each truck's weight by more than 670 pounds through specification changes, resulting in savings of 11,400 gallons of diesel fuel per year -- Equipping the fleet with highly engineered aerodynamic panels to reduce drag -- Reducing idling time through measures such as diesel-fired bunk heaters, commercial transponders for bypassing weigh stations, increasing the use of team drivers and designating convenient "no idling" parking areas at selected terminals
The move to lower the company's speed governors comes as part of an enterprise-wide Con-way Inc. sustainability initiative designed to promote awareness of and efforts toward sustainability throughout the organization. Con-way has established sustainability as a fundamental corporate process focused on continuous improvement and adoption of sustainable business practices that remove costs and waste while reducing impact on the environment.
Schmidt added that the speed reduction initiative is being accomplished without any deterioration in service to customers.
"We have adjusted our operational planning and management controls to ensure we can reap the benefits of this change for the environment, while continuing to meet the needs of our customers for consistent, reliable on-time service," he noted. "I want to especially commend our drivers for their support. Their professionalism is really showing through. They recognize the importance of this initiative and the key role they play in making it successful."
About Con-way Truckload
Joplin, Mo.-based Con-way Truckload is an operating company of Con-way Inc. (NYSE: CNW) and a leading provider of expedited, time-definite full-truckload transportation services across North America. Formerly Contract Freighters, Inc. (CFI), Con-way Truckload today employs over 3,000 drivers with a fleet of more than 2,700 tractors and 8,600 trailers operating throughout the United States as well as internationally in Mexico and Canada. The company provides full-truckload transportation serving the transcontinental shipping needs of commercial and industrial businesses as well as sister company Con-way Freight. For more about Con-way Truckload, visit us on the Web at www.con-way.com/truckload or call (800) 641-4747.
Con-way Inc. (NYSE: CNW) is a $4.7 billion freight transportation and global logistics company and FORTUNE magazine's "Most Admired Company" in transportation and logistics for 2008.
Contacts: Con-way Inc. Gary Frantz (650) 378-5335 frantz.gary@con-way.com KG Partners Belinda Donovan/Amber Caouette (207) 773-0700 bdonovan@kgmoment.com acaouette@kgmoment.com
SOURCE: Con-way Truckload
mailto:frantz.gary@con-way.com mailto:bdonovan@kgmoment.com mailto:acaouette@kgmoment.com
Copyright 2008 Market Wire, All rights reserved.
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