Free Risk Adjusted Return Calculator
Evaluate Returns While Considering Investment Risk
The Risk-Adjusted Return Calculator allows investors to measure the performance of their investments while taking risk into account. Instead of only looking at raw gains or losses, this tool evaluates returns in relation to the amount of risk taken, helping you compare different investments more effectively. By inputting your investment returns and the associated risk metrics, this calculator provides a clear score indicating how well your investments perform per unit of risk. Ideal for both beginners and seasoned investors, it helps in making smarter financial decisions, optimizing portfolios, and tracking progress over time. Regular use ensures you can maximize gains while managing risk efficiently.
Risk Adjusted Return Calculator
Calculate the Sharpe Ratio to measure risk adjusted return.
Calculation Results
Sharpe Ratio
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Calculation Breakdown
Risk Adjusted Return Calculator Guide
The Formula We Use
Sharpe Ratio = (Portfolio Return - Risk Free Rate) ÷ Standard Deviation of PortfolioPortfolio Return = Average return of the investmentRisk Free Rate = Rate of return on a safe investment (like government bonds)Standard Deviation = Measure of volatility or risk
Example Calculation
- Sharpe Ratio = (12 - 2) ÷ 15 ≈ 0.67
- Sharpe Ratio ≈ 0.67
How to Use This Calculator
- Enter your portfolio's annualized return.
- Add the risk free rate (like treasury bond rate).
- Input the portfolio's standard deviation.
- Run the calculation to get the Sharpe ratio.
Tips for Using Risk Adjusted Return
- Higher is better: A Sharpe ratio above 1 is good, above 2 is excellent.
- Compare investments: Use to see which asset offers better return per unit of risk.
- Adjust for volatility: Focuses on efficiency, not just raw returns.
- Not perfect: Sharpe assumes returns are normally distributed; use with other metrics.
This is educational content, not financial advice.
Benefits of Using
Risk Adjusted Return Calculator
Assess Risk Effectively
Analyze returns considering investment risk.
Quick Calculation
Instantly measure risk-adjusted returns with a few inputs.
Investor-Friendly
Simple interface for both beginners and experts.
Accurate Metrics
Precise results to compare investments with different risk levels.
Global Applicability
Supports investments worldwide including stocks, ETFs, and mutual funds.
Data Privacy
No data is stored; calculations happen securely in-browser.
Frequently Asked Questions
What is risk adjusted return?
It measures investment returns while factoring in the risk taken.
Why use it?
It helps compare different investments on a fair risk return basis.
Can it handle global investments?
Yes, any stock, ETF, or mutual fund can be analyzed.
Is it beginner-friendly?
Yes, easy interface provides clear results.
Can I calculate historical data?
Yes, input past returns and volatility to measure risk-adjusted performance.
Is my data secure?
Calculations are performed locally; no data is stored externally.