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Sharpe ratio calculator

Sharpe ratio calculator

Sharpe ratio 0.5 Could be better

The Sharpe ratio measures the return you get for each unit of risk taken: (return − risk-free rate) ÷ volatility. The higher, the better; above 1 is considered good.

This Sharpe ratio calculator works out the risk-adjusted return of your portfolio from its return, the risk-free rate and its volatility.

Return isn’t everything — risk matters too

Two portfolios can post the same return with very different risk. The Sharpe ratio puts a number on that trade-off, so you can compare investments fairly: the higher it is, the more return you’re getting for each unit of risk you took on. Not financial advice.

FAQ

What is the Sharpe ratio?
It measures the return you get for each unit of risk taken: (portfolio return − risk-free rate) ÷ volatility. It lets you compare investments with different levels of risk on equal footing.
What is a good Sharpe ratio?
Above 1 is generally considered good, above 2 very good, and above 3 excellent. A negative ratio means you underperformed the risk-free rate for the risk you took.
What should I use as the risk-free rate?
Typically the yield on a short-term government bond (e.g. a 3-month T-bill or equivalent) for the same period as your return.