What are the limitations of using Jensen Alpha as a benchmark for cryptocurrency returns?

1 answers

• Dec 27, 2021 · 3 years ago
  While Jensen Alpha can be a useful tool for evaluating the risk-adjusted returns of traditional investment portfolios, its applicability to cryptocurrencies is limited. Cryptocurrencies have a different risk profile and operate in a highly volatile and speculative market. The lack of regulation and transparency in the cryptocurrency market makes it challenging to accurately calculate the risk-adjusted returns and establish reliable benchmarks. Therefore, it is important to use additional metrics and qualitative analysis when assessing the performance of cryptocurrencies. As an expert in the field, I would recommend considering other factors such as market sentiment, technological advancements, and the overall ecosystem when evaluating cryptocurrency returns.
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