Enter your portfolio return, risk-free rate, and standard deviation to calculate your Sharpe Ratio in seconds. Free, accurate, no signup required.
Step 1 — Portfolio Return (%) Enter the total return your portfolio generated over the measurement period, expressed as an annual percentage. Example: if your portfolio grew by 12% in a year, enter 12.
Step 2 — Risk-Free Rate (%) Enter the current risk-free rate for the same period. The most commonly used benchmark is the 3-month US Treasury bill yield. As of early 2026, this is approximately 4.3% — but use the rate that matches your measurement period.
Step 3 — Standard Deviation (%) Enter the annualised standard deviation of your portfolio returns. This measures volatility — how much your returns fluctuated around the average. Most brokerage platforms and fund factsheets publish this figure directly.
Result The calculator instantly outputs your Sharpe Ratio using the formula:
Sharpe Ratio = (Portfolio Return − Risk-Free Rate) / Standard Deviation
Suppose:
Sharpe Ratio = (10 − 4) / 12 = 0.50
This indicates weak risk-adjusted performance — the portfolio is generating only 0.50 units of excess return per unit of risk taken.
| Sharpe Ratio | What it means |
|---|---|
| Below 0 | Portfolio underperformed the risk-free rate |
| 0 – 0.5 | Poor risk-adjusted performance |
| 0.5 – 1.0 | Weak but positive — room for improvement |
| 1.0 – 2.0 | Good — acceptable risk-adjusted return |
| Above 2.0 | Excellent — strong return per unit of risk |
Keep in mind: these thresholds vary by asset class. A Sharpe Ratio of 0.8 may be excellent for a bond portfolio but weak for an equity fund. Always compare against peers in the same category.
Three inputs: your portfolio’s total return (%), the risk-free rate (%), and the annualised standard deviation of your returns (%). All three must use the same time period — typically one year.
For USD portfolios, use the 3-month US Treasury bill yield. For EUR portfolios, use the ECB deposit rate or 3-month Euribor. Use whatever matches your portfolio’s currency and measurement period.
Yes. A negative result means your portfolio return was lower than the risk-free rate — you would have done better simply holding cash or T-bills.
Generally, above 1.0 is considered good and above 2.0 is excellent. However, context matters — always compare your result against similar funds or strategies, not an absolute threshold.
No. It means better compensation for the risk taken, not necessarily less risk. Two portfolios can have identical Sharpe Ratios with very different volatility levels.
A very high ratio (above 3–4) usually means either a short measurement period, smoothed or infrequently-priced returns, or a strategy with hidden tail risk. High Sharpe Ratios from options-selling or carry strategies often collapse in crisis periods.
The Sharpe Ratio has important assumptions and limitations that affect how you should interpret it — especially for non-standard portfolios or in volatile markets.
👉 Sharpe Ratio Explained — formula, interpretation, practical examples
👉 Advanced Sharpe Ratio Analysis — pitfalls, rolling Sharpe, portfolio optimisation
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