What is a honest and bleak Sharpe Ratio?
what is a good and bad Sharpe Ratio?
Answers: "Good" or "Bad" sort of depends...it's a comparative tool (like P/E ratio is), not an TRUE measurement, that will help you chose sagaciously between two options.one will be better, but that doesn't mean the two option you are chosing between are not BOTH dreadful! LOL!
From Investopedia:
"A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns.
The Sharpe ratio tell us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. This measurement is remarkably useful because although one portfolio or fund can reap higher returns than its peers, it is single a good investment if those higher returns do not come beside too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance have been."
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Answers: "Good" or "Bad" sort of depends...it's a comparative tool (like P/E ratio is), not an TRUE measurement, that will help you chose sagaciously between two options.one will be better, but that doesn't mean the two option you are chosing between are not BOTH dreadful! LOL!
From Investopedia:
"A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns.
The Sharpe ratio tell us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. This measurement is remarkably useful because although one portfolio or fund can reap higher returns than its peers, it is single a good investment if those higher returns do not come beside too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance have been."