Also referred to as the Sharpe Ratio, a risk-adjustment return is an analysis ratio that provides insight into how risk compares to return in an investment. It measures to reward-to-variability ratio of a potential investment by dividing the risk-adjusted return with the volatility. Due to this, investors can directly compare the risk of each investment. The higher the ratio, the more returns the investment offers.
Risk-Adjusted Returns
Market Terms
We don't know everything about the markets. We're just devoted to learning. Taken from those smarter than ourselves, here's how we define Risk-Adjusted Returns.