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
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
CEOs Directory Screen CEOs from public companies around the world | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |