Sharpe Ratio

The Sharpe ratio measures the performance of an investment compared to a risk-free asset, after adjusting for its risk.

Explanation

It is used to understand the return of an investment relative to its risk. A Sharpe ratio below 1.0 often indicates that the returns may not be adequate to the level of risk taken.

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Practical Example of Sharpe Ratio

ONE-SIGNAL's Sharpe Ratio for it's S&P 500 solution is 2.7.

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