Sharpe Ratio Calculator
The Sharpe Ratio Calculator measures risk-adjusted return — how much excess return a portfolio earns per unit of volatility. Enter portfolio return, risk-free rate, and standard deviation to get the Sharpe ratio.
Formula
Sharpe Ratio = (Portfolio Return − Risk-Free Rate) ÷ Standard Deviation
- Higher is better — more excess return per unit of risk.
- Above 1 is generally good, above 2 is very good, above 3 is excellent.
12% return, 4% risk-free, 10% volatility
Inputs
- Portfolio Return: 12 %
- Risk-Free Rate: 4 %
- Standard Deviation: 10 %
(12 − 4) ÷ 10 = 0.8 units of excess return per unit of risk.
Frequently asked questions
What is a good Sharpe ratio?
Above 1.0 is considered good, above 2.0 very good, and above 3.0 excellent, though it depends on the asset class.