Sharpe Ratio

Sharpe Ratio

William F Sharpe🪒, a Nobel Laureate 🧠 came up with the Sharpe ratio to understand the risk of investment versus its return. Sharpe Ratios being high are a good thing.

Investors may want to use the Sharpe Ratio to understand how an investment has done or to calculate how well an investment is expected to perform. Some portfolios may have great returns, using the Sharpe Ratio will tell you if that is because of smart investing or serious risk-taking.

Always check what duration portfolio managers 😏 are using in the Sharpe Ratio, a longer duration will show less risk, and may not be an accurate depiction😒.


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