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. 

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

  1. First, determine the average realized return (%).
    • The average realized return (%) is calculated to be : 30.
  2. Next, determine the required rate of return (%). 
    • The required rate of return (%) is measured to be: 20.
  3. Next, determine the target downside deviation (%). 
    • The target downside deviation (%) is found to be: 5.
  4. 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  = ( )