Risk adjusted return

[Roger Bedford]

Does anyone know the formula for calculating 'Risk adjusted return'?
Susan Abboud uses the concept in a link in the following
article where you can check the calcultions to ensure you are talking about
the same formula as she is as there appears to be many similar calculations
but I couldn't find the one that worked:

http://www.moneysense.ca/investing/mutual_funds/columnist.
jsp?content=20020830_131617_3052
Then click 'Bang for your buck' near the bottom of her article.

Any help would be gretly appreciated.

Roger

 

[Norman Harker]

Hi Roger!

I think that what you're looking for is the Sharpe Index

See:
http://www.finplan.com/invest/sharpeindex.asp

You need the Portfolio return, Risk free return and the Standard
deviation of your portfolio return

Sharpe Index = (Portfolio Return-Risk Free Return)/Standard Deviation
--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)
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