Sharpe Ratio
DEFINATION
The ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Formular
\({Sharpe\ ratio} = \frac {R_p - R_f} {\sigma_p}\) Where: \(R_p = return\ of\ portfolio\) \(R_f = risk\ free\ rate\) \(\sigma_p = standard\ devation\ of\ the\ {portfolio’s}\ excess\ return\)