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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
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Friday, May 16, 2008
Northwest Airlines Announces New Non-Stop Service between Memphis and Columbia, Mo.
Comtex
EAGAN, Minn., May 16, 2008 (BUSINESS WIRE) ----Northwest Airlines (NYSE: NWA) announced today it will offer daily nonstop service between its Memphis hub and Columbia, MO beginning August 19, 2008. Northwest Airlines was granted the Essential Air Service (EAS) route in late April.
"Northwest Airlines is pleased to offer new service to Columbia, Missouri. This is great for the community, the airport and surrounding communities it serves," said Dennis Newman, vice president of network planning and scheduling. "We will offer central Missouri customers direct service to our Memphis hub, and the ability to connect to the rest of our U.S. and international destinations."
"A Memphis connection is new for us," said City of Columbia spokesperson Toni Messina, "and the prospect of conveniently traveling from that hub to a wide range of cities is a great selling point."
Messina said that travelers throughout the region look forward to getting acquainted with Northwest Airlines and its wholly-owned subsidiary, Mesaba Airlines, which will operate the flight. "Convenient, reliable and well-priced service is what attracts the public," noted Messina.
Customers can purchase tickets beginning Saturday, May 24, 2008.
The new service will be operated by Northwest Airlink partner Mesaba on a 34-seat SAAB 340.
Northwest will fly three daily flights between Memphis and Columbia, with the exception of weekend service. The Memphis-Columbia flight 3171 will not operate on Saturday nights. Flight 3174 from Columbia to Memphis will not operate on Sunday mornings.
Memphis-Columbia ====================================================================== Flight Number: Departs: Arrives: ====================================================================== NW 3175 9:25 a.m. 11:05 a.m. ====================================================================== NW 3172 2:25 p.m. 2:05 p.m. ====================================================================== NW 3171(a) 7:40 p.m. 9:20 p.m. ======================================================================
(a)Daily except Saturday
Columbia-Memphis ====================================================================== Flight Number: Departs: Arrives: ====================================================================== NW 3174(a) 6:00 a.m. 7:44 a.m. ====================================================================== NW 3170 11:25 a.m. 1:09 p.m. ====================================================================== NW 3173 4:25 p.m. 6:08 p.m. ======================================================================
(a)Daily except Sunday
Northwest is offering 1,000 WorldPerks Bonus Miles for roundtrip travel between Memphis and Columbia from August 19 through September 30, 2008. Registration is required prior to travel. Additional terms and conditions apply. Details can be found at www.nwa.com/offers/memcou08.
The new flights between Memphis and Columbia are available for booking at www.nwa.com, through travel agencies or by calling Northwest Airlines Reservations at 1-800-225-2525.
For more information on visiting Columbia, log on to http://www.gocolumbiamo.com/
Northwest Airlines is one of the world's largest airlines with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1,000 cities in excess of 160 countries on six continents.
SOURCE: Northwest Airlines
Northwest Airlines
Copyright Business Wire 2008
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