What this calculator does
Sharpe ratio works out return earned above the risk-free rate, per unit of volatility taken on. Enter your own figures above and the answer updates as you type: nothing is fixed in the code, so the result reflects exactly the numbers you supply.
The formula this calculator evaluates is printed under the tool and explained below, so you can check the working by hand or reuse it in a spreadsheet.
The formula
FormulaSharpe ratio = (Portfolio return − Risk-free rate) / Standard deviation of portfolio return
The inputs explained
| Field | What to enter |
|---|---|
| Portfolio (or asset) return (%) | A number, measured in %. Starts at 12. |
| Risk-free rate (%) | A number, measured in %. Starts at 4. |
| Standard deviation of returns (%) | A number, measured in %. Starts at 15. |
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the answer changes with portfolio (or asset) return
Every other input is held at the calculator’s starting values while portfolio (or asset) return varies. Select any row to load that scenario into the calculator.
How the answer changes with portfolio (or asset) return
| Portfolio (or asset) return (%) | Sharpe ratio | Excess return | Reading |
|---|---|---|---|
| 6 | 0.13 | 2.00% | Sub-1: modest reward for the risk taken |
| 9 | 0.33 | 5.00% | Sub-1: modest reward for the risk taken |
| 12 | 0.53 | 8.00% | Sub-1: modest reward for the risk taken |
| 18 | 0.93 | 14.0% | Sub-1: modest reward for the risk taken |
| 24 | 1.33 | 20.0% | Solid risk-adjusted return |
| 36 | 2.13 | 32.0% | Very strong risk-adjusted return |