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Sharpe Ratio Calculator
Risk-adjusted return. Higher Sharpe = better performance per unit of risk.
Enter values to see your result
Frequently asked questions
What is Sharpe interpretation?
<0.5 poor, 0.5–1 average, 1–2 good, 2–3 very good, 3+ excellent. Most equity portfolios are in 0.5–1.5 range. Very high Sharpe sometimes signals return manipulation.
Why subtract risk-free rate?
To isolate "excess return" — compensation for taking risk. 10% return in a 10% risk-free environment is zero excess.
What's wrong with Sharpe?
Penalises upside volatility (which investors like). Also assumes normally distributed returns — tails matter, especially in crisis periods.
Sortino vs Sharpe?
Sortino uses only downside deviation — a better metric when returns are skewed. Sharpe is more common but Sortino is arguably superior.