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.

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.