Alpha Calculator

Alpha Calculator

This Alpha Calculator will compute the value of alpha based on the Capital Asset Pricing Model. This CAPM-based approach will take the portfolio return, risk-free rate, beta, and market return, and calculate alpha from these elements:

Here is a snippet of the alpha calculator template:

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Capital Assets Pricing Model (CAPM)

The CAPM formula is expressed as follows:

r = R_f + beta (R_m – R_f) + Alpha

Therefore,

Alpha= R – R_f – beta (R_m-R_f)

Where:

R represents the portfolio return

R_f represents the risk-free rate of return

Beta represents the systemic risk of a portfolio

R_m represents the market return

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