Alpha Calculator (Jensen's Alpha)
Measure an investment's risk-adjusted performance relative to a benchmark.
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Helpful Tips
- •Save your calculations by bookmarking this page with your inputs in the URL.
- •Try different scenarios to understand how changes affect your results.
- •Share this calculator with friends or family who might find it useful.
- •Use the results as a starting point for conversations with financial advisors.
- •Bookmark this page and revisit quarterly to track your progress toward goals.
When to Use This Calculator
When you want to determine if an investment portfolio's performance exceeds what would be expected given its risk and the market's performance.
alphajensen's alphainvestingportfoliorisk management
Who Benefits Most
- •Portfolio Managers
- •Financial Analysts
- •Investors
4 min
AdvancedReal-World Example: Evaluating Portfolio Management Skill
Scenario
A portfolio manager claims to have outperformed the market. The portfolio's beta is 1.2, its expected return was 15%, and the market return was 10% with a risk-free rate of 3%.
Outcome
The Alpha calculator shows the portfolio generated an alpha of 5.6%, indicating it outperformed the benchmark on a risk-adjusted basis.
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