Alpha-Beta Values

The Alpha-Beta values are plotted on this graph. The horizontal axis is Beta while the vertical axis is Alpha. The red squares are the values for a long-term bond fund. The blue triangles are for REITs. The green diamonds are for a small cap fund. The Alpha-Beta value is relative to an S&P 500 fund.

It is commonly believed that bonds, REITs, and small-caps are excellent diversifiers relative to S&P 500. Based on this graph, it is clear that is very true. However, the appropriate measurements of the optimal Alpha-Beta matrix are not clear yet. This will be our next quest.