How can investors use Jensen’s alpha to assess the risk-adjusted returns of cryptocurrency investments?

3 answers

• DEHUA LEIJun 23, 2025 · 2 months ago
  Jensen’s alpha is a measure that helps investors assess the risk-adjusted returns of their cryptocurrency investments. It takes into account both the overall market performance and the specific risk associated with the investment. By comparing the actual returns of a cryptocurrency investment with the expected returns based on the market performance and the risk-free rate, investors can determine whether the investment has generated excess returns. A positive Jensen’s alpha indicates that the investment has outperformed the market, while a negative alpha suggests underperformance. It is an important tool for evaluating the skill of fund managers and the performance of investment portfolios.
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• BerychcDec 01, 2022 · 3 years ago
  Jensen’s alpha is a fancy term used by finance geeks to measure how well an investment has performed relative to its risk. In the context of cryptocurrency investments, it can help investors determine whether they are getting a good return considering the amount of risk they are taking. Basically, it compares the actual returns of a cryptocurrency investment with the returns that would be expected based on the overall market performance and the risk-free rate. If the investment has a positive Jensen’s alpha, it means it has generated excess returns above what would be expected. On the other hand, a negative alpha suggests that the investment has underperformed. So, if you're into cryptocurrencies and want to assess the risk-adjusted returns of your investments, Jensen’s alpha is a useful tool to consider.
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• a boongaMay 31, 2021 · 4 years ago
  Jensen’s alpha is a widely used metric in the finance industry to evaluate the risk-adjusted returns of investments, including cryptocurrency investments. It takes into account the systematic risk of the investment, which is the risk that cannot be diversified away, and compares it to the expected return based on the market performance. If the actual return of a cryptocurrency investment is higher than the expected return, it indicates that the investment has generated positive alpha, meaning it has outperformed the market after adjusting for risk. On the other hand, if the actual return is lower than the expected return, it suggests negative alpha, indicating underperformance. By using Jensen’s alpha, investors can better understand the risk-adjusted performance of their cryptocurrency investments and make more informed decisions.
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