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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 / Telecom
Wednesday, May 14, 2008
Overstock.com Looks to NeuStar's UltraDNS for Mission-Critical Infrastructure
Comtex
STERLING, Va., May 14, 2008 /PRNewswire-FirstCall via COMTEX News Network/ ----NeuStar, Inc. (NYSE: NSR) today announced that Overstock.com, a popular online closeout retailer, has chosen NeuStar's UltraDNS Managed DNS Service to provide Overstock.com with a global DNS infrastructure that significantly enhances end-user experience and operational security -- and protects revenue in the highly competitive online retail market.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080310/NEUSTARLOGO )
Overstock.com has traditionally hosted its public DNS infrastructure in-house. As a growing number of companies are discovering, however, this approach is inconsistent with what is rightly recognized as a "mission-critical" infrastructure. With DNS increasingly at the core of critical business processes and communication services, companies can no longer rely on traditional, in-house approaches to their DNS infrastructure. Today, a DNS infrastructure needs to deliver carrier-class performance with "five nines" availability, comprehensive security, massive scalability, and 24/7 monitoring and support. Yet, the development, maintenance, and support of such an infrastructure is often impractical for companies that need to focus resources on their core businesses.
"Online retailing is extremely competitive. Customers have very demanding expectations of their online experience, and online retailers are constantly looking to establish a competitive advantage," said Dr. Patrick M. Byrne, chairman and CEO at Overstock.com. "Consequently, every component of our service delivery must ensure the highest levels of security and operational excellence. We're satisfied the UltraDNS Managed DNS Service meets our standard."
With the UltraDNS Managed DNS Service, Overstock.com also will benefit from the DNS Shield(TM), a revolutionary extension of the UltraDNS infrastructure. The DNS Shield involves the deployment of authoritative DNS servers within the heart of the networks of leading ISPs, creating a hardened and secure DNS infrastructure that provides unprecedented levels of Internet performance and advanced protection against Distributed Denial of Service (DDoS) and pharming attacks for over 100 million Internet users.
"Overstock.com's decision to migrate to NeuStar's UltraDNS platform is further evidence of the critical role of DNS within the online retail market," said Jeffrey Samuels, general manager and vice president of marketing at NeuStar's Internet and Registry Managed Services group. "When every dollar of revenue a company earns is dependent on its online presence, fortifying the DNS infrastructure -- the first network touch point -- is even more essential in ensuring the security and reliability of the web experience."
About NeuStar, Inc.
NeuStar is a provider of clearinghouse and directory services to the global communications and Internet industry. Visit NeuStar online at www.NeuStar.biz.
About Overstock.com
Overstock.com, Inc. is an online "closeout" retailer offering discount, brand-name merchandise for sale over the Internet. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory liquidation distribution channel. Overstock.com, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com.
Overstock.com(R) is a registered trademark of Overstock.com, Inc. All other marks are the marks of their respective owners.
SOURCE NeuStar, Inc.
http://www.neustar.biz
Copyright (C) 2008 PR Newswire. All rights reserved
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