How to Calculate Jensen's Alpha?
Jensen's Alpha calculator uses Jensen's Alpha = Annual Return on Investment-(Risk Free Interest Rate+Beta of the Portfolio*(Annual return of the market benchmark-Risk Free Interest Rate)) to calculate the Jensen's Alpha, Jensen's Alpha is used to measure the risk-adjusted performance of a security or portfolio in relation to the expected market return. Jensen's Alpha is denoted by α symbol.
How to calculate Jensen's Alpha using this online calculator? To use this online calculator for Jensen's Alpha, enter Annual Return on Investment (Rp), Risk Free Interest Rate (Rf), Beta of the Portfolio (βp) & Annual return of the market benchmark (Rm) and hit the calculate button. Here is how the Jensen's Alpha calculation can be explained with given input values -> 11.585 = 12-(0.5+0.85*(0.4-0.5)).