Portfolio Sharpe Ratio Calculator
Calculate the Sharpe ratio of your portfolio to measure risk-adjusted return.
Compare how much return you are earning per unit of risk taken.
Sharpe Ratio
Sharpe Ratio Formula
Sharpe Ratio = (Portfolio Return − Risk-Free Rate) ÷ Standard Deviation
Developed by Nobel laureate William Sharpe, this ratio measures how much excess return you earn for each unit of risk (volatility) you accept.
Interpretation:
- Below 1.0 — poor risk-adjusted performance
- 1.0 – 1.99 — adequate (acceptable)
- 2.0 – 2.99 — very good
- 3.0 and above — excellent
The S&P 500 historically has a Sharpe ratio of around 0.4 – 0.6 over long periods. Hedge funds typically target Sharpe ratios above 1.0.