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And the slope is called beta.
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That may be a familiar enough concept to you,
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but in the context of finance this is a major concept.
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The way I've written it, the beta of Shiller, Inc.
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is the slope of this line.
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The alpha is just the intercept of this curve.
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We can also do this with excess returns.
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I will get to this later,
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where I have the return minus the interest rate on this axis
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and the market return minus the interest rate on this axis.
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In that case, alpha is a
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measure of how much Shiller,Inc. outperforms.