Free Sharpe Ratio Calculator
Evaluate Risk Adjusted Returns for Your Investments
The Sharpe Ratio Calculator allows investors to assess how much return they are receiving for the level of risk taken on an investment. By entering the investment’s expected return, the risk-free rate, and the standard deviation of returns, this tool calculates the Sharpe ratio. A higher Sharpe ratio indicates better risk-adjusted performance, helping investors compare different investments effectively. Using this calculator can guide portfolio decisions, optimize asset allocation, and ensure that potential returns justify the risks taken. Both beginner and experienced investors can benefit from quickly understanding which investments offer superior risk-adjusted returns and enhance their portfolio strategy.
Sharpe Ratio Calculator
Measure the risk-adjusted return of an investment.
Calculation Results
Sharpe Ratio
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Calculation Breakdown
Sharpe Ratio Calculator Guide
The Formula We Use
Sharpe Ratio = (Portfolio Return − Risk Free Return) ÷ Portfolio Std DevExcess Return (Rp − Rf) = Average Periodic Return − Average Risk Free ReturnAnnualized Sharpe = √N × Periodic Sharpe(N = periods/year, e.g., 252 daily, 12 monthly)Interpretation:Higher is better risk adjusted performance
Example Calculation
- Excess Return = 12% − 4% = 8%
- Sharpe Ratio = 8% ÷ 10% = 0.80
- Sharpe 0.80 ⇒ Decent risk adjusted return; 1.0+ is strong, 2.0+ is excellent
How to Use This Calculator
- Enter portfolio returns (same frequency) and the matching risk-free rate.
- Provide portfolio standard deviation for that same frequency.
- Calculator computes excess return and divides by volatility to get Sharpe.
- Need annualized Sharpe? Multiply periodic Sharpe by
√N.
Tips for Better Interpretation
- Match frequencies: Returns, risk free rate, and stdev must use the same period.
- Pick a realistic Rf: Use T Bills or similar for the same horizon.
- Downside matters: For asymmetric risk, consider Sortino Ratio too.
- Use enough data: Longer, consistent samples reduce noise.
- Compare like for like: Benchmark Sharpe across similar strategies.
This is educational content, not financial advice.
Benefits of Using Our
Sharpe Ratio Calculator
Measure Risk Adjusted Returns
Analyze how much return you’re earning per unit of risk.
Compare Investments
Evaluate different investments on a risk-adjusted basis.
Optimize Portfolio
Identify which assets contribute best to portfolio performance.
Beginner Friendly
Provides simple outputs with clear interpretation for all investors.
Mobile Responsive
Work seamlessly on smartphones, tablets, and desktops.
Private & Secure
All calculations are processed locally; no data is stored.
Frequently Asked Questions
What is a Sharpe Ratio Calculator?
This calculator measures the return of an investment relative to its risk, providing a risk-adjusted performance metric.
Why is the Sharpe Ratio important?
It helps investors compare investment returns while considering the risk involved.
Can it compare multiple investments?
Yes, you can analyze different assets or portfolios to find the best risk-adjusted performer.
Is it suitable for beginners?
Yes, the interface is intuitive and explains results in a simple manner.
Does it require complex financial knowledge?
No, basic inputs like returns and standard deviation are all that’s needed.
Is my data safe?
Yes. Calculations occur locally on your device; no data is stored.