Sharpe Ratio Calculator

The Sharpe ratio is used by investors and analysts to compare the performance of different investments or portfolios on a risk-adjusted basis. It helps to determine whether an investment or portfolio is generating adequate returns relative to the amount of risk it is taking on.

Here is a table that provides a general guideline for interpreting Sharpe ratios:

It is important to note that these are just general guidelines, and what is considered a good Sharpe ratio may vary depending on the industry, investment strategy, and risk appetite of the investor.

The Sharpe ratio is a financial metric used to evaluate the performance of an investment or portfolio in relation to its risk. It is calculated as the excess return of the investment or portfolio above the risk-free rate divided by the standard deviation of those excess returns.

The formula for the Sharpe ratio is as follows:

Sharpe Ratio = (Rp - Rf) / σp

where:

• Rp = the expected return of the investment or portfolio
• Rf = the risk-free rate of return
• σp = the standard deviation of the investment or portfolio's excess returns