Strategy outperformance

The measurement of "Alpha"—the value added (or lost) by the trading strategy relative to a passive buy-and-hold approach. This metric identifies whether the active decisions of the strategy resulted in a better outcome than simply holding the asset for the same duration.

Exclusions: This is a relative comparison of realized strategy results against a passive benchmark. It does not account for the different levels of risk or volatility taken to achieve those results.

Positive value: The strategy successfully outperformed the market, justifying the complexity and costs of active trading.

Negative value: The strategy underperformed the market. In this case, the user would have been financially better off with a passive investment, as the active trading "destroyed" potential value.

Calculation Formula

This is the simple difference between what the strategy’s Net P&L and what the asset itself returned.