Sharpe ratio
The Sharpe ratio divides excess return by return volatility using a stated period and risk-free-rate convention.
Plain-language meaning
The Sharpe ratio divides excess return by return volatility using a stated period and risk-free-rate convention.
Why it is useful
Sharpe ratio is useful as descriptive evidence when it is compared on the same definition, source, period, unit and exact listing. It is one input to research, not a verdict.
Where it appears in XMarketRadar
Look for Sharpe ratio in Portfolio Analytics, Risk Cockpit, holding analysis, performance views and relevant screeners.
How it is calculated or sourced
Subtract the stated risk-free return from portfolio return and divide by return volatility for a matched frequency; annualise only under the disclosed convention.
Inputs, period and unit
Read the disclosed inputs or source, observation period, bar interval, unit, native currency and scale. A value without its source and as-of context is incomplete; unlike units must not be combined.
Worked example
Illustrative only: With 12% return, 4% risk-free rate and 16% volatility under matched annual conventions, Sharpe ratio is (12−4)/16 = 0.50.
What high and low mean
A higher or lower Sharpe ratio value is descriptive, not automatically good or bad. Meaning depends on the instrument, comparison period, method and related evidence.
Positive, negative and genuine zero
Positive and negative Sharpe ratio values retain the definition shown here. A genuine reported or computed zero is displayed as 0 and is not the same as missing evidence.
Limitations and common mistakes
Historical Sharpe is sensitive to frequency, sample, currency and the risk-free rate. For mutual funds, XMarketRadar suppresses the ratio when annualised volatility is below 0.5%, and suppresses NAV-derived returns for IDCW/dividend and segregated/side-pocket series rather than publishing misleading values.
Market-specific differences
The concept is used across all supported markets, but currency, price scale, session calendar, source field and regulatory definition can differ. XMarketRadar preserves the exact exchange context.
Suggested next steps
Open the related Portfolio and risk terms below, then follow the matching Help Centre task guide and inspect Sharpe ratio on an exact exchange listing. Confirm source, as-of time, units and unavailable reason before using it in research.
Educational information only; not investment advice or an order service.
This Sharpe ratio tutorial is educational and descriptive. It is not investment advice, a price prediction, a recommendation, or an instruction to buy, sell, rebalance or place an order.
Also known as: sharpe