What is the Sharpe Ratio?

The Sharpe Ratio measures risk-adjusted performance by comparing excess return to volatility.

What inputs do I need?

You need expected return, risk-free rate, and volatility (standard deviation).

Is a higher Sharpe Ratio better?

Generally yes. Higher Sharpe Ratios indicate better risk-adjusted performance.

Sharpe Ratio Calculator

Calculate risk-adjusted performance using the Sharpe Ratio. Enter expected return, risk-free rate, and volatility to evaluate how efficiently a portfolio or asset generates return per unit of risk.

Expected annual return (%) Risk-free rate (%)

Annual volatility (%) Scenario label

Sharpe Ratio = (Return − Risk-free rate) / Volatility

Important: This tool uses simplified assumptions and is for educational purposes only.

Formulas used

Excess return

Excess = Return − Risk-free rate

Sharpe Ratio

Sharpe = Excess / Volatility

The Sharpe Ratio helps compare investments with different risk levels by showing how much return you receive per unit of volatility.

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Information on this site is for educational purposes only and is not financial, tax, or legal advice.

Sharpe Ratio Calculator

Formulas used

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