Finance

Jensen's Alpha Calculator

Measure risk-adjusted outperformance of a portfolio versus its CAPM expected return.

Portfolio Return (%)

Risk-Free Rate (%)

Portfolio Beta

Market Return (%)

Formula:
Alpha = Portfolio Return − [Rf + Beta × (Market Return − Rf)]
Expected Return (CAPM) = Rf + Beta × Market Premium
Positive alpha = outperformance

What Alpha Means

Positive alpha indicates the manager generated returns above what was expected given the portfolio's risk level (beta). It's the most widely used measure of active management skill.