How can Jensen's alpha be used to evaluate the risk-adjusted returns of digital currencies?
Prasenjeet KambleDec 24, 2021 · 3 years ago3 answers
Can you explain how Jensen's alpha can be used to evaluate the risk-adjusted returns of digital currencies?
3 answers
- Dec 24, 2021 · 3 years agoJensen's alpha is a measure used to evaluate the risk-adjusted returns of digital currencies. It takes into account the risk-free rate of return and the beta of the digital currency. By comparing the actual return of the digital currency with the expected return based on its beta, Jensen's alpha can determine whether the digital currency has outperformed or underperformed the market. A positive alpha indicates that the digital currency has generated higher returns than expected, while a negative alpha indicates lower returns. It is a useful tool for investors to assess the performance of digital currencies in relation to their risk.
- Dec 24, 2021 · 3 years agoJensen's alpha, baby! It's like a secret weapon for evaluating the risk-adjusted returns of digital currencies. You see, it takes into account not only the returns of the digital currency, but also the risk involved. It's like having a superpower that can tell you if a digital currency is worth investing in or not. So, if you want to know if a digital currency is making bank or going bankrupt, just calculate its Jensen's alpha and you'll have your answer, my friend!
- Dec 24, 2021 · 3 years agoUsing Jensen's alpha to evaluate the risk-adjusted returns of digital currencies is a common practice in the investment world. It provides a way to measure the excess returns of a digital currency after adjusting for its risk. By comparing the actual returns with the expected returns based on the digital currency's beta, Jensen's alpha can give investors an idea of how well the digital currency has performed relative to the market. It's a useful tool for assessing the risk-adjusted performance of digital currencies and making informed investment decisions.
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