Enter your investment return, risk-free rate, and the standard deviation of the portfolio to calculate the Sharpe ratio of the portfolio.
Sharpe Ratio Formula
The following formula can be used to calculate the Sharpe ratio of an investment.
SR = (IR – RFR) / SD
- Where SR is the Sharpe ratio
- IR is the investment return
- RFR is the risk-free return
- SD is the standard deviation
Sharpe Ratio Definition
A Sharpe ratio is defined as the ratio of the difference between an investment and a risk-free asset with respect to the standard deviation of those investments.
