Sharpe Ratio Calculator
Risk-adjusted return of an investment or portfolio.
Enter your values
ⓘ Live results
Results
- Sharpe ratio
- 0.53
- Excess return over risk-free
- 8%
- Rating
- Subpar
Quick answer
A higher Sharpe ratio means better return per unit of risk taken; ratios above 1 are generally considered good, above 2 very good.
Sharpe = (portfolio return - risk-free rate) / standard deviation
How to use the Sharpe Ratio Calculator
- 1Enter the portfolio's average annual return and its standard deviation (volatility) over the same period.
- 2Enter the risk-free rate (e.g., current T-bill yield).
- 3A higher Sharpe ratio means more return earned per unit of risk taken.
Worked example
Using the values the calculator loads with:
Inputs
- Portfolio annual return12 %
- Risk-free rate4 %
- Portfolio standard deviation15 %
Results
- Sharpe ratio0.53
- Excess return over risk-free8%
- RatingSubpar
Frequently asked questions
What counts as a good Sharpe ratio?
Above 1 is generally considered good, above 2 is very good, and below 0 means the investment underperformed the risk-free rate.
What are Sharpe ratio's limitations?
It assumes returns are normally distributed and penalizes upside volatility the same as downside, unlike the Sortino ratio.
About this calculator
- Built and reviewed by James Whitfield · How we build and test calculators
- Report an error
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.