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For one thing, it’s much easier to create [[vega]]: anyone and, indeed, everyone can: you simply introduce [[leverage]]. (Have a [[mortgage]] on your house? congratulations; you’ve generated [[vega]]). | For one thing, it’s much easier to create [[vega]]: anyone and, indeed, everyone can: you simply introduce [[leverage]]. (Have a [[mortgage]] on your house? congratulations; you’ve generated [[vega]]). | ||
[[Alpha]], on the other hand, really is special, since QED only a certain portion of the market can generate it. Because it's an expression of variance from a mean, for every whizz-kid who generates [[positive alpha]], someone’s generating an equivalent amount of [[negative alpha]] (i.e., returns than are ''worse'' than [[beta]]). | [[Alpha]], on the other hand, really is special, since [[QED]] only a certain portion of the market can generate it. Because it's an expression of variance from a mean, for every whizz-kid who generates [[positive alpha]], someone’s generating an equivalent amount of [[negative alpha]] (i.e., returns than are ''worse'' than [[beta]]). | ||
===Why you should run for the hills when you see a product called [[leveraged alpha]]=== | ===Why you should run for the hills when you see a product called [[leveraged alpha]]=== | ||