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Sharpe Ratio Calculator

Calculator

What is the Sharpe Ratio?

The Sharpe Ratio is the average return above the risk-free rate of return on an investment. The risk free rate of return is an investment in a US Treasury.

A high sharpe ratio means that the investment is making a lot of money above the risk-free rate of return.

A low sharpe ratio means that the investment is making only a little money above the risk-free rate of return.

A negative sharpe ratio means that the investment is making less money than risk-free investment such as a US Treasury.

Formula

Sharpe Ratio = (Expected Return – Risk Free Rate) / Portfolio Standard Deviation