Calculate Your Fund'sSharpe Ratio

Measure risk-adjusted returns with precision. Make smarter investment decisions with our professional-grade Sharpe ratio calculator.

Sharpe Ratio Calculator

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Understanding the Sharpe Ratio

The Sharpe ratio measures the performance of an investment compared to a risk-free asset, after adjusting for its risk.

How It's Calculated

Sharpe Ratio = (Rp - Rf) / σp

Rp = Return of portfolio

Rf = Risk-free rate

σp = Standard deviation of portfolio

This formula helps investors understand whether a portfolio's returns are due to smart investment decisions or excessive risk. A higher Sharpe ratio indicates better risk-adjusted performance.

Risk-Adjusted Returns

Compare investments fairly by accounting for the risk taken to achieve returns.

Portfolio Optimization

Identify funds that provide the best return per unit of risk taken.

Investment Decisions

Make data-driven choices about which funds deserve your capital.

Frequently Asked Questions

Everything you need to know about the Sharpe ratio and our calculator.

The Sharpe ratio uses the risk-free rate as the baseline return. Typically, this is the yield on government treasury bills or bonds (like 3-month or 10-year Treasury rates). Our tool automatically uses the up to date Secured Overnight Financing Rate (SOFR).

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