How can Jenson's alpha be used to evaluate the performance of cryptocurrency funds?

3 answers

• Nov 25, 2021 · 3 years ago
  Jenson's alpha is a widely used measure to evaluate the performance of investment portfolios, including cryptocurrency funds. It takes into account both the risk-free rate of return and the fund's excess return compared to a benchmark. By calculating Jenson's alpha, investors can assess whether a cryptocurrency fund is generating returns that are higher or lower than expected, given its level of risk. This metric helps investors identify funds that outperform or underperform the market.
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• Nov 25, 2021 · 3 years ago
  When evaluating the performance of cryptocurrency funds using Jenson's alpha, key factors such as the fund's beta, the risk-free rate of return, and the benchmark used for comparison are taken into consideration. The beta measures the fund's sensitivity to market movements, while the risk-free rate represents the return on a risk-free investment. The benchmark is typically a market index that represents the overall performance of the cryptocurrency market. By comparing the fund's excess return to the benchmark, Jenson's alpha provides insights into the fund's ability to generate returns above or below the market.
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• Nov 25, 2021 · 3 years ago
  Jenson's alpha is a useful tool for evaluating the performance of cryptocurrency funds. It considers the fund's risk-adjusted returns, which is important in the volatile cryptocurrency market. By comparing the fund's returns to the risk-free rate and the benchmark, investors can determine whether the fund is generating excess returns or underperforming. This information can help investors make informed decisions about their investments and identify funds that have the potential to outperform the market. At BYDFi, we use Jenson's alpha as one of the metrics to assess the performance of cryptocurrency funds on our platform.
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