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Treynor Ratio Calculator

Calculator

What is the Treynor Ratio?

The Treynor Ratio is the average return above the risk-free rate of return on an investment. The risk free rate of return can be an investment such as a U.S. Treasury investment or a diversified portfolio.

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

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

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

Formula

Treynor Ratio = (Portfolio’s Return – Risk Free Rate) / Portfolio Beta