Sharpe Ratio Calculator
Investing & MarketsCalculate the Sharpe ratio of a portfolio, measuring risk-adjusted return.
Sharpe Ratio
The portfolio Sharpe ratio, measuring excess return earned per unit of risk taken.
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Odeh Ahwal0people find this calculator helpful
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Saved
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Investing & Markets calculators
Frequently Asked Questions
What does the Sharpe ratio measure?
The Sharpe ratio measures how much excess return a portfolio earns above a risk-free rate for each unit of volatility, or risk, taken — a higher ratio indicates better risk-adjusted performance.
What is considered a good Sharpe ratio?
As a general guide, a Sharpe ratio above 1 is considered acceptable, above 2 is very good, and above 3 is considered excellent, though comparison against similar strategies provides more meaningful context.
What is commonly used as the risk-free rate?
Short-term government treasury bill yields are commonly used as a proxy for the risk-free rate, since they represent a return achievable with minimal risk of default.
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