Financial Education

Risk-Adjusted Return

Return scaled by risk (Sharpe, Sortino, Information ratio)

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Risk-Adjusted Return

Return scaled by risk (Sharpe, Sortino, Information ratio)

Definition

Risk-adjusted returns account for volatility and risk taken. Sharpe ratio divides excess return by volatility. Sortino focuses on downside deviation. Information ratio compares active return to tracking error.

Related Topics

#performance measurement #volatility adjustment #risk management #portfolio evaluation

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Category: Risk

Risk management involves identifying, assessing, and controlling potential losses in investment portfolios.

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