Finance

Instant, private, and free

Jensen's Alpha Calculator.

Calculate risk-adjusted Jensen's alpha from portfolio return, benchmark return, risk-free rate, and beta.

On-device calculationNo signup

Set your values

Results update as you type.

02 / ANSWER

Portfolio return

Risk-free rate

Portfolio beta

Market return

Jensen's alpha

0.00%%

FAQs

How does the jensen alpha calculator work?

Enter the requested values to receive a deterministic result. No live market, tax, or jurisdiction data is inferred.

Use Cases

Evaluate Fund Manager Performance

Investors can assess whether a mutual fund or hedge fund manager has added value beyond what the market risk would predict.

Example: Compare a fund's alpha to its benchmark index to decide if the management fee is justified.

Compare Portfolio Strategies

Use alpha to compare different investment strategies or portfolios on a risk-adjusted basis, helping to choose the most efficient approach.

Example: Determine which of two portfolios with similar beta has higher alpha.

Frequently Asked Questions

What is Jensen's Alpha?: Jensen's Alpha measures the excess return of a portfolio over its expected return based on the Capital Asset Pricing Model (CAPM). It indicates whether a portfolio manager has added value relative to the risk taken.
How is Jensen's Alpha calculated?: Alpha = Portfolio Return - (Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)). A positive alpha means the portfolio outperformed the benchmark after adjusting for risk, while a negative alpha indicates underperformance.
What does a positive or negative alpha mean?: A positive alpha suggests the portfolio earned more than expected for its risk level, implying skilled management. A negative alpha suggests underperformance relative to the risk taken, possibly due to poor stock selection or high fees.

Tips & Common Mistakes

Tips

Ensure you use the same time period for all inputs (e.g., annual returns) to get a meaningful alpha.
Use a consistent risk-free rate, such as the yield on a 10-year government bond, for accurate comparison.
Beta should reflect the portfolio's sensitivity to the market index you are using as the benchmark.
Remember that alpha is historical and does not guarantee future performance.

Common Mistakes to Avoid

Using different time periods for portfolio return and market return, which skews the alpha calculation.
Inputting the portfolio's total return instead of the excess return over the risk-free rate.
Confusing beta with alpha; beta measures risk, alpha measures performance relative to that risk.

Last updated: August 13, 2026

Use Cases

Evaluate Fund Manager Performance

Investors can assess whether a mutual fund or hedge fund manager has added value beyond what the market risk would predict.

Example: Compare a fund's alpha to its benchmark index to decide if the management fee is justified.

Compare Portfolio Strategies

Use alpha to compare different investment strategies or portfolios on a risk-adjusted basis, helping to choose the most efficient approach.

Example: Determine which of two portfolios with similar beta has higher alpha.

Frequently Asked Questions

What is Jensen's Alpha?

Jensen's Alpha measures the excess return of a portfolio over its expected return based on the Capital Asset Pricing Model (CAPM). It indicates whether a portfolio manager has added value relative to the risk taken.

How is Jensen's Alpha calculated?

Alpha = Portfolio Return - (Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)). A positive alpha means the portfolio outperformed the benchmark after adjusting for risk, while a negative alpha indicates underperformance.

What does a positive or negative alpha mean?

A positive alpha suggests the portfolio earned more than expected for its risk level, implying skilled management. A negative alpha suggests underperformance relative to the risk taken, possibly due to poor stock selection or high fees.

Tips & Common Mistakes

Tips

Ensure you use the same time period for all inputs (e.g., annual returns) to get a meaningful alpha.
Use a consistent risk-free rate, such as the yield on a 10-year government bond, for accurate comparison.
Beta should reflect the portfolio's sensitivity to the market index you are using as the benchmark.
Remember that alpha is historical and does not guarantee future performance.

Common Mistakes to Avoid

Using different time periods for portfolio return and market return, which skews the alpha calculation.
Inputting the portfolio's total return instead of the excess return over the risk-free rate.
Confusing beta with alpha; beta measures risk, alpha measures performance relative to that risk.

Finance

Instant, private, and free

Jensen's Alpha Calculator.

Calculate risk-adjusted Jensen's alpha from portfolio return, benchmark return, risk-free rate, and beta.

On-device calculationNo signup

Set your values

Results update as you type.

02 / ANSWER

Portfolio return

Risk-free rate

Portfolio beta

Market return

Jensen's alpha

0.00%%

FAQs

How does the jensen alpha calculator work?

Enter the requested values to receive a deterministic result. No live market, tax, or jurisdiction data is inferred.

Related Calculators

Effective Duration CalculatorCalculate effective duration from explicit user inputs with transparent assumptions and instant, debounced results.Effective Interest Rate CalculatorCalculate effective interest rate from explicit user inputs with transparent assumptions and instant, debounced results.EMV CalculatorCalculate emv from explicit user inputs with transparent assumptions and instant, debounced results.Ending Inventory CalculatorCalculate ending inventory from explicit user inputs with transparent assumptions and instant, debounced results.Enterprise Value CalculatorCalculate enterprise value from explicit user inputs with transparent assumptions and instant, debounced results.EOQ CalculatorCalculate eoq from explicit user inputs with transparent assumptions and instant, debounced results.

Use Cases

Evaluate Fund Manager Performance

Investors can assess whether a mutual fund or hedge fund manager has added value beyond what the market risk would predict.

Example: Compare a fund's alpha to its benchmark index to decide if the management fee is justified.

Compare Portfolio Strategies

Use alpha to compare different investment strategies or portfolios on a risk-adjusted basis, helping to choose the most efficient approach.

Example: Determine which of two portfolios with similar beta has higher alpha.

Frequently Asked Questions

What is Jensen's Alpha?: Jensen's Alpha measures the excess return of a portfolio over its expected return based on the Capital Asset Pricing Model (CAPM). It indicates whether a portfolio manager has added value relative to the risk taken.
How is Jensen's Alpha calculated?: Alpha = Portfolio Return - (Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)). A positive alpha means the portfolio outperformed the benchmark after adjusting for risk, while a negative alpha indicates underperformance.
What does a positive or negative alpha mean?: A positive alpha suggests the portfolio earned more than expected for its risk level, implying skilled management. A negative alpha suggests underperformance relative to the risk taken, possibly due to poor stock selection or high fees.

Tips & Common Mistakes

Tips

Ensure you use the same time period for all inputs (e.g., annual returns) to get a meaningful alpha.
Use a consistent risk-free rate, such as the yield on a 10-year government bond, for accurate comparison.
Beta should reflect the portfolio's sensitivity to the market index you are using as the benchmark.
Remember that alpha is historical and does not guarantee future performance.

Common Mistakes to Avoid

Using different time periods for portfolio return and market return, which skews the alpha calculation.
Inputting the portfolio's total return instead of the excess return over the risk-free rate.
Confusing beta with alpha; beta measures risk, alpha measures performance relative to that risk.

Last updated: August 13, 2026