Sharpe Ratio Calculator
Calculate the Sharpe ratio of an investment to measure its risk-adjusted return. Compare different investments and understand how risk affects your returns.
Step 1: Investment Parameters
Understanding the Sharpe Ratio
The Sharpe ratio measures the excess return per unit of risk. A higher Sharpe ratio indicates better risk-adjusted performance. A ratio above 1 is generally good, above 2 is very good, and above 3 is excellent.
Step 2: Calculation Settings
Sharpe Ratio Formula
Sharpe Ratio = (Portfolio Return – Risk-Free Rate) / Portfolio Standard Deviation. This measures how much excess return you receive for the extra volatility you endure for holding a riskier asset.
Sharpe Ratio Analysis
Portfolio Sharpe Ratio
Investment Comparison
| Investment Type | Expected Return | Standard Deviation | Sharpe Ratio | Risk-Adjusted Grade |
|---|
Risk-Return Analysis
Sharpe Ratio Interpretation
Sharpe Ratio = (Portfolio Return – Risk-Free Rate) / Portfolio Standard Deviation
< 0: Investment is underperforming the risk-free rate
0 – 1: Acceptable risk-adjusted return
1 – 2: Good risk-adjusted return
2 – 3: Excellent risk-adjusted return
> 3: Exceptional risk-adjusted return
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