**Security characteristic line** (SCL) is a regression line,^{[1]} plotting performance of a particular security or portfolio against that of the market portfolio at every point in time. The SCL is plotted on a graph where the Y-axis is the excess return on a security over the risk-free return and the X-axis is the excess return of the market in general. The slope of the SCL is the security's beta, and the intercept is its alpha.^{[2]}

where:

*α*_{i}is called the asset's alpha (abnormal return)*β*(_{i}*R*_{M,t}–*R*) is a nondiversifiable or systematic risk_{f}*ε*_{i,t}is the non-systematic or diversifiable, non-market or idiosyncratic risk*R*_{M,t}is the return to market portfolio*R*is a risk-free rate_{f}