Answer: Jensen's alpha

**Explanation:** - **Option A (M-squared):** Incorrect because M-squared adjusts portfolio returns for total risk relative to a benchmark, not just systematic risk. - **Option B (Sharpe ratio):** Incorrect because the Sharpe ratio is derived from total risk, which is applicable for undiversified portfolios but not ideal for evaluating performance based solely on systematic risk. - **Option C (Jensen's alpha):** Correct because Jensen's alpha specifically measures performance based on systematic risk. It calculates the difference between the actual portfolio return and the risk-adjusted return, providing a metric relative to the market portfolio.

Author: LeetQuiz Editorial Team