Jensen

Jensen, in financial and mathematical contexts, refers to Jensen’s inequality, a concept that describes how the value of a convex (or concave) function applied to an average is related to the average of the function's values. Essentially, it states that for a convex function, applying it to an average input yields a result less than or equal to the average of the function applied to individual inputs. This helps in understanding how risks and returns behave in investments, highlighting that diversification can influence expected outcomes due to the nonlinear nature of some functions.