How is this calculated?
We use standard financial formulas to compound returns over the specified time period.
- •Save your calculations by bookmarking this page with your inputs in the URL.
- •Try different scenarios to understand how changes affect your results.
- •Share this calculator with friends or family who might find it useful.
- •Use the results as a starting point for conversations with financial advisors.
- •Bookmark this page and revisit quarterly to track your progress toward goals.
Calculate investment returns and analyze portfolio performance.
Step-by-Step Instructions
Enter your initial investment amount and expected contributions.
Input the expected annual rate of return and time horizon.
Review the growth chart to understand compound interest effects.
When you want to determine if an investment portfolio's performance exceeds what would be expected given its risk and the market's performance.
- •Portfolio Managers
- •Financial Analysts
- •Investors
Scenario
A portfolio manager claims to have outperformed the market. The portfolio's beta is 1.2, its expected return was 15%, and the market return was 10% with a risk-free rate of 3%.
Outcome
The Alpha calculator shows the portfolio generated an alpha of 5.6%, indicating it outperformed the benchmark on a risk-adjusted basis.
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Real-world case studies showing how advisors use the Alpha Calculator (Jensen's Alpha) with clients.