Unknown Indicator
Jensen Alpha In A Nutshell
Let us use this in an example. You are searching funds and find two that are the same return and other stats. Using the Jensen Alpha, you may be able to see which one is taking on less risk to obtain those returns compared to the other that may be using more risk to generate those returns. That means one may have greater volatility and many investor attempt to eliminate that aspect of the portfolio.
Alpha is the measure of return for a given equity, portfolio, or investment. This data point is what we want to maximize without increasing factors such as risk or cost. Jensen Alpha measures return but takes into account a risk-adjusted aspect of the alpha. Using this alpha will also utilize CAPM and take into account the product or portfolio beta number. Beta is the correlation to the underlying market and how it reacts, with a 1 being a lock step with the underlying.
Closer Look at Jensen Alpha
Everybody looks at returns and the factors that go into them individually, but we all are searching for the same. Less risk for greater returns. Jensen Alpha helps to take into account the risk aspect but that doesn’t mean it is the stopping point, but merely a directional indicator. Look at fundamentals and historical performance to gain a better understand and what you can expect going forward.
Other Indicators
All Technical Analysis
Generate Optimal Portfolios
Other Complementary Tools
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Stocks Directory Find actively traded stocks across global markets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum |