Note the addition of alpha, to represent the potential value addition of a fund manager.
Furthermore, notice that the beta term in the regression formula is equivalent to the beta term introduced earlier, and is calculated in the same manner.
By rearranging the terms slightly, we will be able to run a regression and determine whether
is indeed reliably positive or not. To run the test, we set up the data as excess returns,
subtracting the f r term from both sides of the equation.