Browse Investing

Risk Adjusted Performance Ratios

Risk-adjusted performance ratio terms for comparing portfolio return with volatility, downside risk, beta, and active risk.

Risk Adjusted Performance Ratios terms measure portfolio return, attribution, benchmark-relative results, tracking error, and risk-adjusted performance.

Use this branch when the question depends on how performance was calculated, attributed, benchmarked, or adjusted for risk.

What This Branch Covers

AreaUse it for
Alpha, Information Ratio, and Tracking ErrorReturn calculation, attribution, benchmark, capture ratio, tracking error, alpha, Sharpe, Sortino, Treynor, or risk-adjusted performance terms.
Risk-Adjusted Return ConceptsReturn calculation, attribution, benchmark, capture ratio, tracking error, alpha, Sharpe, Sortino, Treynor, or risk-adjusted performance terms.
Sharpe, Sortino, and Treynor RatiosReturn calculation, attribution, benchmark, capture ratio, tracking error, alpha, Sharpe, Sortino, Treynor, or risk-adjusted performance terms.

What to Check

Check the return formula, cash-flow timing, benchmark, fee treatment, reference rate or hurdle rate input, volatility period, attribution model, currency, and whether performance is gross, net, historical, or hypothetical.

Common Mistakes

  • Comparing money-weighted and time-weighted returns as if they were the same.
  • Reading alpha without checking benchmark and risk exposure.
  • Ignoring fees, cash flows, taxes, and survivorship bias.
  • Treating a high ratio as proof a strategy is suitable.

This page is educational and does not recommend a specific portfolio, security, fund, tax treatment, or account choice.

In this section

Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.

Alpha and Tracking

Alpha, information-ratio, Jensen's alpha, and tracking-error terms used in active-risk evaluation.

Risk-Adjusted Return

Core risk-adjusted return terms used before selecting a specific performance ratio.

Sharpe and Sortino

Sharpe, Sortino, and Treynor ratio terms used to compare return with risk taken.

Revised on Sunday, June 21, 2026