Investing
Sharpe Ratio
Return per unit of risk
Calculate the Sharpe Ratio of any portfolio — return per unit of volatility. See how well you are compensated for risk taken.
Portfolio
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How It Works
Sharpe = (Rₚ − R_f) ÷ σₚ
Rₚ = portfolio return · R_f = risk-free rate · σₚ = volatility
12% return · 3% risk-free · 10% vol
- 1Sharpe = (0.12 − 0.03) ÷ 0.10
- 2Sharpe = 0.90
Result: 0.90 — good risk-adjusted return
Pro Tip
Above 1.0 is excellent; below 0.5 consider a different strategy.
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Sharpe Ratio Calculator: Measure Risk-Adjusted Returns Like a Pro
Learn how to calculate the Sharpe ratio, interpret it correctly, and compare investments by risk-adjusted return. Free Sharpe ratio calculator included.
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