Jensen’s alpha calculates the difference between the portfolio actual return and the required return by the Capital Asset Pricing Model (CAPM). It gives you the abnormal return of a security or portfolio over the theoretical expected return, predicted by the CAPM. A positive Jensen’s alpha identifies that the portfolio has outperformed the market. By contrast, a negative result marks a portfolio that has underperformed the market.

This open-access Excel template is a useful tool for statisticians, financial analysts, data analysts, portfolio managers, and anyone working with spreadsheet software.

Jensen’s Alpha is among the topics included in the Portfolio Management module of the CFA Level 1 Curriculum. Gain valuable insights into the subject with our Portfolio Management course.

You can also explore other related templates such as—M2 Ratio, Treynor Ratio, and Stock Beta.