Jensen’s Alpha Calculator in Excel

The Jensen’s Alpha is a popular risk-adjusted performance measure used by portfolio managers to determine how much excess returns their portfolio has generated over and above the market returns as suggested by the CAPM model.

A positive alpha indicates that the portfolio has outperformed the market, and vice versa.

The Jensen’s Alpha can be calculated using the following formula:

$\alpha =R_{P}-\left ( R_{f}+\beta \left ( R_{M} -R_{f}\right ) \right )$