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About Sharpe Ratio Calculator Online
This tool computes the Sharpe ratio — a risk-adjusted measure of investment return developed by Nobel laureate William Sharpe. It is the portfolio's excess return (return minus the risk-free rate) divided by its standard deviation. Higher is better.
The Sharpe ratio answers the key question: "Am I getting paid enough for the risk I'm taking?" A ratio above 1.0 is generally considered good, above 2.0 is very good, and above 3.0 is exceptional. Comparing portfolios by raw return alone is misleading — a portfolio with double the return but triple the volatility may actually have a worse Sharpe ratio.
Use it to evaluate mutual funds, hedge funds, ETFs, and trading strategies. It is most useful when comparing strategies with similar holding periods and the same risk-free rate assumption.
How to use this tool
How to compute a simplified Sharpe ratio
Enter mean return %
"Mean asset return %" is the average return of the asset for the period you're studying, in percent (e.g. 12 for 12%). Use a consistent annualisation if you want an annualised Sharpe.
Std dev of returns %
"Std dev of returns %" is the standard deviation of those returns, also in percent. This proxies the volatility of the return stream. Zero throws "Std dev cannot be 0."
Risk-free rate %
"Risk-free rate %" is the benchmark riskless return (T-bill, OIS, etc.) over the same period; defaults to 0 if you only want excess-over-zero. Negative rates are accepted.
Press Run
Result is sharpe = (meanReturn − riskFreeRate) / stdDevReturn, rounded to 4 decimals. The note flags that the formula uses % inputs as if already scaled — annualise inputs yourself for an annualised Sharpe.