Risk-Adjusted Return

Explanation

Raw returns are meaningless without context. A 20% return with portfolio volatility of 40% is less impressive than a 15% return with 10% volatility. Risk-adjusted return metrics include: Sharpe Ratio (return per unit of total risk), Sortino Ratio (return per unit of downside risk), Information Ratio (active return per unit of tracking error), and Treynor Ratio (return per unit of systematic risk). Stoquity displays multiple risk-adjusted return metrics for every portfolio, enabling fair comparisons across strategies with different risk profiles.