What is the Sharpe Ratio?
The Sharpe Ratio is one of the most widely used measures of risk-adjusted return, showing how much excess return an investment generates for each unit of total risk (volatility) taken.
The formula
Sharpe Ratio = (Portfolio Return − Risk-Free Rate) / Standard Deviation of Returns. Generally, a Sharpe Ratio above 1 is considered good, above 2 is very good, and above 3 is excellent, though context and time period matter.
This calculator is for general investment-analysis education, not investment advice.
Last reviewed August 2026