Sharpe Ratio Calculator

The Sharpe ratio measures excess return per unit of risk. It subtracts the risk-free rate from portfolio return and divides by volatility, rewarding smooth performance over lucky spikes. At its core the tool evaluates Sharpe = (portfolio return − risk-free rate) ÷ standard deviation. A fund returning 11% against a 2% risk-free rate with 12% annualized volatility scores (11 − 2) ÷ 12 = 0.75; cutting volatility to 9% at the same return lifts the Sharpe to 1.0 — same profit, calmer ride. Adjust any field and the outputs recompute immediately, so you can test as many scenarios as you like in the units you prefer.

1. 1

   Step 1

   Gather the numbers the Sharpe Ratio Calculator needs and type them in.

2. 2

   Step 2

   The engine evaluates Sharpe = (portfolio return − risk-free rate) ÷ standard deviation instantly as you type.

3. 3

   Step 3

   Check the output and its unit before using it.

4. 4

   Step 4

   Repeat with different inputs to test alternatives.

• Using arithmetic averages

• Short measurement windows

• Ignoring distribution shape