How is Sharpe ratio calculated?

Posted by Sovrenn
9
Jan 11, 2024
88 Views
The Sharpe ratio is a measurement used to understand the return of an investment compared to its risk. This tool was named after William F. Sharpe, a Nobel laureate and creator of the method. To calculate the Sharpe ratio, you must subtract the risk-free rate from the expected portfolio return. The result is then divided by the standard deviation of the portfolio’s excess return.
Comments
avatar
Please sign in to add comment.