Which metric indicates the total return of an investment above a benchmark?

Alpha is the metric that effectively indicates the total return of an investment above a benchmark. It measures the performance of an investment relative to a market index or benchmark, establishing whether the investment has outperformed or underperformed when compared to the expected return based on its risk profile. Positive alpha signifies that the investment has generated returns exceeding those anticipated based on its volatility, effectively showcasing the manager's ability to generate excess returns through skillful investment decisions.

In contrast, beta measures an investment's sensitivity to market movements, indicating the investment's volatility relative to the broader market but does not express how much additional return has been generated. Standard deviation assesses the variability or dispersion of returns around the mean, informing investors about the investment's risk but not providing insight into performance relative to a benchmark. The correlation coefficient evaluates the degree to which two variables move in relation to one another, such as the correlation between the returns of the investment and the benchmark, but again does not assess total return relative to a benchmark.