Financial modelling terms explained

Jensen's Alpha

Jensen's alpha is a measure of the performance of a portfolio manager that can be used to determine whether a specific fund or portfolio manager has added value to a fund

What is Jensen's Alpha?

Jensen's alpha is a measure of the excess return of a security or portfolio over the expected return, which is calculated using the capital asset pricing model (CAPM). Jensen's alpha takes into account the risk of the security or portfolio by using the beta coefficient. The higher the alpha, the better the investment.

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