Every investment carries with it some level of risk and reward. Unfortunately, these are unknown variables. They change over time and in the face of market factors, and there’s no way of knowing ...

Most investment professionals are familiar with the formula known as the Sharpe Ratio. The calculation is so omnipresent in financial circles that it even features as a sales objection on the ...

Individual investors typically look at their accounts in terms of profit/loss. For professional portfolio managers, the assumption is that they will make a profit over the long run, so they're ...

Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Gordon Scott has been an active investor and ...

The K-Ratio measures the consistency and quality of an investment's returns over time, providing more detail than traditional metrics like the Sharpe ratio. It evaluates risk-adjusted performance by ...

With the interest in hedge funds and other alternative investment mechanisms soaring, here is an attempt to provide an intuitive explanation for understanding and interpreting the Sharpe Ratio and the ...

The Sharpe ratio, a risk measurement and management tool named for Nobel laureate William F. Sharpe, is as easy to explain as it is important. At its core, the Sharpe Ratio tells investors whether a ...

The Sharpe ratio helps investors calculate an investment's risk-adjusted rate of return. The higher, the better. Created by William F. Sharpe, a Nobel Prize–winning economist, the Sharpe ratio ...

The Sharpe ratio, a risk measurement and management tool named for Nobel laureate William F. Sharpe, is as easy to explain as it is important. At its core, the Sharpe Ratio tells investors whether a ...

The Sharpe ratio compares an investment's excess return over a benchmark to the standard deviation of returns. The higher the Sharpe ratio, the better the investment's historical risk-adjusted ...