Really confused. Finding various different ways of calculating security selection alpha. I believe it matters from whose perspective one is looking at.
I am a portfolio manager and I want to know what my alpha from security selection was based on a benchmark.
Group | Portfolio Wgt| Portfolio Return| Benchmark Wgt| Benchmark Return
Healthcare| 20% |3%| 50%| 1%
Technology 80%| -2%| 50%| 0.50%|
Is my Security Selection alpha from Technology
= 50%*(-2 - 0.5)
- I apologize if this is really basic but I am having trouble getting my head around it. I feel like both are right.