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Treating high R-squared as outperformance

A large R² says that the fitted line leaves relatively little response variation unexplained in this record.

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Read the original score

The original paired record has R²=147/151≈97.350993%. That number is not a 97.35% probability of future success, a percentage profit or proof of manager skill.

Inspect what the score removes

Replacing every asset return with its negative preserves R² and reverses correlation and slope signs. A squared fit score therefore cannot establish whether the fitted relationship is positive or negative, let alone whether an investment is desirable.

Retain the appraisal model

Risk-adjusted performance interpretation needs the relevant return basis, benchmark and model. A raw intercept is not automatically Jensen alpha, and a correctly computed alpha estimate still does not settle luck versus skill.

Use the actual evidence gap

Review the data window, return definitions, residuals and required uncertainty analysis. The calculator supplies a descriptive fit rather than a recommendation or performance certification.

Further references