Jensen's Alpha Calculator
Measure investment performance with Jensen's alpha Calculator  a powerful tool for assessing riskadjusted returns. Analyze your portfolio's performance with ease!
Result
Jensens Alpha
0%
Related Calculators: Sharpe Ratio, Sortino Ratio, Treynor Ratio, Information Ratio, /calc/maximumdrawdown/
Jensen's Alpha Formula
Jensen's alpha is a widely used metric in finance to evaluate the riskadjusted returns of an investment portfolio. It measures the excess return generated by a portfolio over the theoretical return predicted by the Capital Asset Pricing Model (CAPM).
The formula to calculate Jensen's alpha is:
Alpha = Portfolio Return  (RiskFree Rate + Beta * (Market Return  RiskFree Rate))
Where:
 Alpha: Represents the excess return of the portfolio.
 Portfolio Return: The actual return achieved by the portfolio.
 RiskFree Rate: The rate of return on a riskfree investment, such as a government bond.
 Beta: Measures the sensitivity of the portfolio's returns to the overall market returns.
 Market Return: The average return of the market.
By calculating Jensen's alpha, investors can assess whether a portfolio has outperformed or underperformed the market, considering the systematic risk associated with the investment.
More Articles

The role of dividends in building wealth through investing

Longterm vs. Shortterm Investing: Pros and Cons

Navigating Market Volatility: How to Stay Calm During Turbulent Times

7+ Proven Tips for Saving Money on Your Grocery Bill

Investment Lessons from the Past: How Historical S&P 500 Returns Can Improve Your Strategy

From Bear to Bull: How to Spot the End of a Market Downturn

The Power of Pooled Resources: The Benefits of Investment Clubs

Realistic Investment Goals: Understanding Compound Annual Growth Rate

Sipping Piña Coladas on a Yacht: A StepbyStep Guide to Living off Your Investments

Why a 50% Stock Decline Isn't as Scary as You Might Think