What term refers to the difference between possible realized returns and expected returns?

The term that refers to the difference between possible realized returns and expected returns is alpha. Alpha is often used in the context of investment performance to measure how much more or less an investment has earned compared to a benchmark or expected return. A positive alpha indicates that the investment has outperformed the expected return, while a negative alpha suggests underperformance.

This concept is particularly important in active investing, where the goal is to achieve returns that exceed the market average. Investors and fund managers often look to maximize alpha as a sign of successful investment strategy and skill.

Standard deviation, variance, and beta, while related to the analysis of investment returns and risks, do not directly measure the difference between realized and expected returns. Standard deviation indicates the volatility of returns, variance measures the dispersion of returns from the average, and beta assesses an investment's sensitivity to market movements. Therefore, alpha is the most appropriate term for the difference mentioned in the question.