{"id":154,"date":"2015-05-29T09:38:05","date_gmt":"2015-05-29T07:38:05","guid":{"rendered":"http:\/\/wpcalc.com\/?p=154"},"modified":"2025-05-09T14:49:43","modified_gmt":"2025-05-09T11:49:43","slug":"sharpe-ratio","status":"publish","type":"post","link":"https:\/\/wpcalc.com\/en\/finance\/sharpe-ratio\/","title":{"rendered":"Sharpe Ratio Calculator"},"content":{"rendered":"<section class=\"not-prose calculator-box\" aria-labelledby=\"calculator-title\"><div class=\"flex items-baseline sm:items-center justify-between gap-2 sm:gap-3\"><div class=\"flex flex-col sm:flex-row sm:items-center gap-2\"><span class=\"icon icon-calculator text-primary-700! text-base! dark:text-primary-300!\" aria-hidden=\"true\"><\/span><h2 class=\"text-lg font-display font-bold\">Risk-Adjusted Return (Sharpe Ratio) Calculator<\/h2><\/div><div class=\"relative group inline-block\">\n  <button class=\"favorite\" id=\"favorite\" data-favorite-id=\"154\" data-favorite-title=\"Sharpe Ratio\" data-favorite-url=\"https:\/\/wpcalc.com\/en\/finance\/sharpe-ratio\/\" data-favorite-excerpt=\"This calculator measures the Sharpe Ratio \u2014 a financial metric that evaluates the risk-adjusted return of an investment. It\u2019s widely used by investors, analysts, and portfolio managers to compare the efficiency of different assets or funds.\" aria-label=\"Add to Favorites\" data-favorite-icon=\"icon icon-storage-unit\">\n    <span class=\"icon icon-shape-star-empty\"><\/span>\n  <\/button>\n  <div class=\"absolute right-full -translate-y-1\/2 top-1\/2 mr-2 w-max max-w-xs px-3 py-2 bg-gray-800 text-white text-xs rounded shadow-lg opacity-0 group-hover:opacity-100 transition-opacity duration-200 z-10 pointer-events-none\">\n   <span class=\"favorite-tooltip\" id=\"favorite-tooltip\"><\/span>\n  <\/div>\n<\/div><\/div><form action=\"https:\/\/wpcalc.com\/en\/finance\/sharpe-ratio\/\" method=\"POST\" class=\"calculator\" id=\"calculator-154\" data-post=\"154\"><fieldset class=\"fieldset-input\"><legend class=\"sr-only\">Input Fields<\/legend><div class=\"field has-term\" id=\"input-1\"><label for=\"field-1\">Portfolio return<\/label><div class=\"term\">Rp<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"number\" name=\"portfolio_return\" id=\"field-1\" min=\"-100\" step=\"0.01\" value=\"12\"\/><div class=\"unit\">%<\/div><small>Expected or historical annual return of the portfolio<\/small><\/div><div class=\"field has-term\" id=\"input-2\"><label for=\"field-2\">Risk-free rate<\/label><div class=\"term\">Rf<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"number\" name=\"riskfree_rate\" id=\"field-2\" min=\"-100\" step=\"0.01\" value=\"3\"\/><div class=\"unit\">%<\/div><small>Return from a risk-free asset (e.g., treasury bond)<\/small><\/div><div class=\"field has-term\" id=\"input-3\"><label for=\"field-3\">Standard deviation<\/label><div class=\"term\">\u03c3<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"number\" name=\"standard_deviation\" id=\"field-3\" min=\"0.01\" step=\"0.01\" value=\"10\"\/><div class=\"unit\">%<\/div><small>Volatility or standard deviation of portfolio returns<\/small><\/div><\/fieldset><div class=\"buttons\"><button type=\"submit\" data-text=\"Re-Calculate\" id=\"calculate-button\" data-post=\"154\">Calculate<\/button><button type=\"reset\">Reset<\/button><\/div><div class=\"field is-checkbox hidden!\" id=\"field-auto-calc\"><input type=\"checkbox\" id=\"auto-calc\"><label for=\"auto-calc\">Calculate automatically<\/label><small>If enabled, the result will update automatically when you change any value.<\/small><\/div><div class=\"fieldset-result is-hidden\" aria-labelledby=\"result-title\" aria-live=\"polite\" role=\"region\"> <h3 class=\"result-title bg-gradient-to-r from-primary-50 to-gray-50 dark:from-primary-900 dark:to-gray-800\" id=\"result-title\"><span class=\"icon icon-s-pulse\" aria-hidden=\"true\"><\/span> Your Results<\/h3><div class=\"result-box\"><div class=\"field-result\" id=\"output-1\"><span class=\"field-title\"><span>Sharpe Ratio<\/span><\/span><span class=\"field-value\" id=\"result-1\"><\/span><button class=\"copy-result\" data-tooltip=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\"><\/span><\/button><\/div><div class=\"field-result is-column\" id=\"output-2\"><span class=\"field-title\"><span>Interpretation<\/span><\/span><span class=\"field-value\" id=\"result-2\"><\/span><button class=\"copy-result\" data-tooltip=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\"><\/span><\/button><\/div><\/div><\/div><a href=\"#respond\" class=\"hidden transition-opacity duration-300 opacity-0 w-50 text-sm justify-center items-center gap-2 px-4 py-2 rounded bg-gray-200 text-gray-700 hover:bg-gray-300\" id=\"leave-comment\"><span class=\"icon icon-comments\" aria-hidden=\"true\"><\/span>Leave a Comment<\/a><\/form><\/section><section id=\"calc-reactions\" class=\"not-prose hidden my-12 bg-gradient-to-r from-primary-50 to-gray-50 border border-indigo-100 rounded-xl px-6 py-4 shadow-sm\" data-post=\"154\" aria-live=\"polite\"><h2 class=\"text-sm text-gray-500 text-center mb-2\">How did this result make you feel?<\/h2><div class=\"grid grid-cols-3 sm:flex sm:flex-row sm:justify-around gap-4 sm:items-center sm:flex-wrap\"><button class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"like\"><span class=\"reaction-count\" data-reaction-count=\"like\">0<\/span><span class=\"reaction text-3xl\">\ud83d\ude00 <\/span><span class=\"reaction-description font-medium\">Like <\/span><\/button><button class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"helpful\"><span class=\"reaction-count\" data-reaction-count=\"helpful\">0<\/span><span class=\"reaction text-3xl\">\ud83d\udca1 <\/span><span class=\"reaction-description font-medium\">Helpful <\/span><\/button><button class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"confused\"><span class=\"reaction-count\" data-reaction-count=\"confused\">0<\/span><span class=\"reaction text-3xl\">\ud83d\ude15 <\/span><span class=\"reaction-description font-medium\">Confused <\/span><\/button><button class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"disappointed\"><span class=\"reaction-count\" data-reaction-count=\"disappointed\">0<\/span><span class=\"reaction text-3xl\">\ud83d\ude1e <\/span><span class=\"reaction-description font-medium\">Disappointed <\/span><\/button><button class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"inaccurate\"><span class=\"reaction-count\" data-reaction-count=\"inaccurate\">0<\/span><span class=\"reaction text-3xl\">\u274c <\/span><span class=\"reaction-description font-medium\">Inaccurate <\/span><\/button><\/div><div id=\"reaction-message\" class=\"hidden mt-8 rounded-md border border-primary-100 bg-white\/50 backdrop-blur-sm px-4 py-2 text-sm text-center shadow-sm\"><\/div><\/section><ins class=\"adsbygoogle\"\n     style=\"display:block; text-align:center; margin: 32px 0;\"\n     data-ad-layout=\"in-article\"\n     data-ad-format=\"fluid\"\n     data-ad-client=\"ca-pub-1721569815777345\"\n     data-ad-slot=\"6317458308\"><\/ins>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script>\n<section class=\"formula-box\" aria-labelledby=\"formula-title\">\r\n\t<div id=\"formula-title\" class=\"not-prose font-display mb-4\"><span class=\"icon icon-formula\" aria-hidden=\"true\"><\/span><h2>Formula of the Sharpe Ratio Calculator<\/h2><\/div>\r\n\t<figure class=\"not-prose formula\">\r\n\t\t<figcaption class=\"formula-title\">Formula<\/figcaption>\r\n\t\t<div class=\"text-base text-gray-800\" id=\"formula\">\n$$\\text{Sharpe Ratio} = \\frac{R_p &#8211; R_f}{\\sigma_p}$$\n<\/div>\r\n\t<\/figure>\r\n\t<br \/>\n<strong>Where:<\/strong><\/p>\n<ul>\n<li>$$R_p\u200b$$ = Expected portfolio return<\/li>\n<li>$$R_f$$\u200b = Risk-free rate<\/li>\n<li>$$\\sigma_p$$\u200b = Standard deviation (volatility) of portfolio return<\/li>\n<\/ul>\n<p><strong>Explanation:<\/strong><br \/>\nThe Sharpe Ratio shows how much excess return you receive for the extra volatility you endure. A higher ratio indicates a better risk-adjusted performance.<br \/>\r\n<\/section>\n<p>Sharpe Ratio is a powerful tool for portfolio optimization. It helps investors:<\/p>\n<ul>\n<li>Compare funds or strategies with similar returns but different risks<\/li>\n<li>Assess whether higher returns justify higher volatility<\/li>\n<li>Make smarter investment decisions<\/li>\n<\/ul>\n<p><strong>Example Variables:<\/strong><\/p>\n<ul>\n<li>Portfolio Return: 12%<\/li>\n<li>Risk-Free Rate: 2%<\/li>\n<li>Standard Deviation: 10%<\/li>\n<li>Sharpe Ratio = (0.12 \u2212 0.02) \/ 0.10 = <strong>1.0<\/strong><\/li>\n<\/ul>\n<p><strong>Interpretation:<\/strong><\/p>\n<ul>\n<li>&lt; 1 = suboptimal risk-adjusted return<\/li>\n<li>1\u20132 = acceptable\/good<\/li>\n<li>> 2 = excellent risk-adjusted performance<\/li>\n<\/ul>\n<p><strong>Use Cases:<\/strong><\/p>\n<ul>\n<li>Mutual fund comparison<\/li>\n<li>Hedge fund evaluation<\/li>\n<li>Personal investment portfolio analysis<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>This calculator measures the Sharpe Ratio \u2014 a financial metric that evaluates the risk-adjusted return of an investment. It\u2019s widely used by investors, analysts, and portfolio managers to compare the efficiency of different assets or funds.<\/p>\n","protected":false},"author":70,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[26],"class_list":["post-154","post","type-post","status-publish","format-standard","hentry","category-finance","tag-inventory"],"acf":[],"_links":{"self":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/users\/70"}],"replies":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/comments?post=154"}],"version-history":[{"count":1,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/154\/revisions"}],"predecessor-version":[{"id":64151,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/154\/revisions\/64151"}],"wp:attachment":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/media?parent=154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/categories?post=154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/tags?post=154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}