Sharpe Ratio
InvestingA measure of risk-adjusted return, calculated as excess return divided by standard deviation — higher is better.
Example
Example: Consider an investor building a $100,000 portfolio. Sharpe Ratio — a measure of risk-adjusted return, calculated as excess return divided by standard — directly affects investment strategy and long-term returns. Getting this concept right can mean tens of thousands of dollars in difference over a 20-year period. Model your portfolio with our investment calculator.