Jensen's Alpha

Jensen's Alpha is a financial metric that measures how much a fund or investment manager's performance exceeds or falls short of what we'd expect based on market movements and the risk taken. If the alpha is positive, the manager has added value beyond normal market gains; if negative, they underperformed after accounting for risk. It helps investors assess the skill of a manager or the effectiveness of an investment strategy beyond just overall returns, by evaluating whether they consistently beat the market after adjusting for risk exposure.