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  1. Dictionary
    Sharpe ra·ti·o
    /ˈSHärp ˌrāSHēō/

    noun

    • 1. a measure that indicates the average return minus the risk-free return divided by the standard deviation of return on an investment.

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  2. money.usnews.com › what-is-the-sharpe-ratioWhat Is the Sharpe Ratio? Formula and Example - U.S. News

    Dec 8, 2023 · The Sharpe ratio is such an important metric that many financial sites list the Sharpe ratios of every fund and index. These ratios can help determine whether portfolio managers get fired or ...

  3. www.britannica.com › money › sharpe-ratio-overviewWhat Is the Sharpe Ratio? Formula, Usage, & Criticisms ...

    The higher the Sharpe ratio, the better the risk-adjusted return. Using the Sharpe ratio. To use the Sharpe ratio, investors simply find the variables for the period being studied, then calculate the ratio. In general, a good Sharpe ratio is higher than 1, indicating that portfolio returns reflect the amount of risk being taken by the manager.

  4. www.investing.com › academy › analysisSharpe Ratio: Definition, Formula - Investing.com

    May 16, 2024 · The Sortino Ratio too provides a slight modification to the Sharpe Ratio, but in a different way. Unlike the Sharpe Ratio, the Sortino Ratio focuses solely on the downside volatility of the portfolio.

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  6. www.schwab.com › learn › storyCalculate the Sharpe Ratio to Gauge Risk | Charles Schwab

    Apr 3, 2024 · Positive Sharpe ratio ranges: 0.0 and 0.99 is considered low risk/low reward. 1.00 and 1.99 is considered good. 2.0 and 2.99 is very good. 3.0 and 3.99 is outstanding. Most investments fall into the 1.00–1.99 range, while readings above 2.0 could suggest the use of leverage to boost returns and, with it, risk. (Remember, leverage amplifies ...

  7. www.morningstar.com › sharpe-ratioWhat is the Sharpe ratio? | Investing Definitions | Morningstar

    Sep 20, 2023 · What is the Sharpe ratio? The Sharpe ratio compares an investment's excess return over a benchmark to the standard deviation of returns. The higher the Sharpe ratio, the better the investment's ...

  8. www.capitalcitytraining.com › knowledge › sharpe-ratioSharpe Ratio Explained: Definitions, Formulas and Examples

    Oct 9, 2023 · The Sharpe Ratio, despite its limitations, is a pivotal metric for evaluating the historical risk-adjusted returns of assets and strategies in corporate finance. It endures as a primary tool to optimize investment and capital budgeting decisions when employed alongside other risk metrics and qualitative factors.

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  10. corporatefinanceinstitute.com › resources › careerSharpe Ratio - How to Calculate Risk Adjusted Return, Formula

    Geometric Sharpe Ratio is the geometric mean of compounded excess returns divided by the standard deviation of those compounded returns. Where: Rx G = Geometric mean of compounded returns. Rf = Risk-free rate of return. σ G = Standard deviation of compounded returns. Since the Sharpe index already factors risk in the denominator, using ...

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