How can Jensen's alpha formula be applied to evaluate the performance of cryptocurrencies?

1 answers

• May 01, 2022 · 3 years ago
  Jensen's alpha formula is a popular method for evaluating the performance of cryptocurrencies. It allows investors to assess whether a particular cryptocurrency has generated excess returns compared to the market. The formula takes into account the risk-free rate of return, the beta of the cryptocurrency, and the actual return. If the calculated alpha is positive, it indicates that the cryptocurrency has outperformed the market, while a negative alpha suggests underperformance. However, it's important to note that Jensen's alpha is just one tool among many for evaluating cryptocurrency performance. Investors should consider other factors such as market trends, fundamental analysis, and the overall risk profile of the cryptocurrency before making investment decisions.
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