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Alpha Calculator
Jensen's Alpha — return above what CAPM would predict for the risk taken.
Alpha
+3.90%
Jensen's Alpha measures a portfolio's excess return above what the Capital Asset Pricing Model (CAPM) predicts, given its beta and the market's actual return.
It isolates skill (or luck) from simply taking on more market risk — a portfolio with high beta that just tracks a rallying market has zero alpha, even with strong raw returns.
FAQ
What does positive alpha mean?
Positive alpha means a portfolio outperformed what CAPM would predict given its level of market risk (beta) — a sign of genuine outperformance rather than just taking on more risk.
What does zero or negative alpha mean?
Zero alpha means the portfolio performed exactly as expected for its risk level; negative alpha means it underperformed what its risk level would predict.