Enter the average realized return (%), the required rate of return (%), and the target downside deviation (%) into the Sortino Ratio Calculator. The calculator will evaluate and display the Sortino Ratio.

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## Sortino Ratio Formula

The following formula is used to calculate the Sortino Ratio.

**SR = (AR – RR) / TD **

- Where SR is the Sortino Ratio ( )
- AR is the average realized return (%)
- RR is the required rate of return (%)
- TD is the target downside deviation (%)

## How to Calculate Sortino Ratio?

The following example problems outline how to calculate Sortino Ratio.

**Example Problem #1**

- First, determine the average realized return (%).
- The average realized return (%) is calculated to be : 30.

- Next, determine the required rate of return (%).
- The required rate of return (%) is measured to be: 20.

- Next, determine the target downside deviation (%).
- The target downside deviation (%) is found to be: 5.

- Finally, calculate the Sortino Ratio using the formula above:

SR = (AR – RR) / TD

The values given above are inserted into the equation below and the solution is calculated:

SR = (30 – 20) / 5 = 2.00

**Example Problem #2**

The variables required for this problem are provided below:

average realized return (%) = 60

required rate of return (%) = 30

target downside deviation (%) = 20

Test your knowledge using the equation and check your answer with the calculator above.

SR = (AR – RR) / TD =** **( )