Tag: Sharpe Ratio

Sharpe Ratio is a tool used by investors to determine a portfolio’s risk-adjusted return performance. It measures the relative excess return of an investment portfolio over a benchmark, such as a market index. The ratio reduces excess return to a single number, enabling investors to compare investments with different levels of risk and return. A higher Sharpe Ratio indicates superior risk-adjusted performance of an investment. When considering investments, investors should look beyond the raw return and instead consider the Sharpe Ratio to compare how an investment performs relative to its risk.