Sortino Ratio Calculator
If you are someone who is keen on investing in the market, then you know how crucial it is to be aware of the risks associated with it. One way to measure the risk of an investment portfolio is by using various risk measures. One such measure is the Sortino ratio. The Sortino ratio is a risk-adjusted performance measure that focuses on downside risk, i.e., the risk of losses. It is named after its creator, Frank A. Sortino. This measure helps investors evaluate how much they are being compensated for the risks they are taking. Our Sortino Ratio Calculator is a tool that allows investors to calculate the Sortino ratio for their investments. It is easy to use and provides an accurate measure of the risk-adjusted performance of your portfolio. This tool will not only help you evaluate your portfolio's performance but also guide you in making better investment decisions. Whether you are a beginner or an experienced investor, our Sortino Ratio Calculator is a valuable tool for anyone who wants to make informed investment decisions. So, start using the calculator today to get a better understanding of the risk and returns of your investments.Sortino Ratio Calculator
Calculate the Sortino Ratio for your investment portfolio.
| Sortino Ratio Calculator Results | |
|---|---|
| Portfolio Return: | 0 |
| Risk-Free Rate: | 0 |
| Portfolio Volatility: | 0 |
| Sortino Ratio: | 0 |
How to Use the Sortino Ratio Calculator
The Sortino Ratio Calculator is a valuable tool for calculating the Sortino Ratio for your investment portfolio. The Sortino Ratio is a risk-adjusted performance measure that helps investors assess the returns generated by an investment relative to its downside volatility. By calculating the Sortino Ratio, you can gain insights into the risk-return profile of your portfolio and evaluate its performance.
Instructions for Utilizing the Calculator
To utilize the Sortino Ratio Calculator, follow these steps:
- Enter Portfolio Return: Input the annual return achieved by your investment portfolio. This represents the percentage increase in the value of your portfolio over a specific period. Enter the value in percentage format.
- Specify Risk-Free Rate: Enter the prevailing risk-free rate of return. The risk-free rate represents the return an investor can expect from a risk-free investment, such as a government bond or Treasury bill. Enter the value in percentage format.
- Provide Portfolio Volatility: Input the volatility or standard deviation of your investment portfolio. Volatility measures the degree of variation in the portfolio's returns over a specific period. Enter the value in percentage format.
- Calculate Sortino Ratio: Click the Calculate Sortino Ratio button to obtain the Sortino Ratio for your investment portfolio.
- Interpret the Results: The calculator will display the calculated Sortino Ratio based on the provided portfolio return, risk-free rate, and portfolio volatility. The Sortino Ratio measures the excess return per unit of downside risk, providing insights into the risk-adjusted performance of the portfolio.
Sortino Ratio Calculator Formula
The Sortino Ratio is calculated using the following formula:
Sortino Ratio = (Portfolio Return - Risk-Free Rate) / Downside Volatility
Where:
- Portfolio Return represents the annual return achieved by the investment portfolio.
- Risk-Free Rate denotes the prevailing risk-free rate of return.
- Downside Volatility is a measure of the portfolio's volatility or standard deviation in relation to negative returns or downside risk.
Illustrative Example
Let's consider an example to illustrate the use of the Sortino Ratio Calculator. Suppose you have an investment portfolio with the following characteristics:
- Portfolio Return: 12%
- Risk-Free Rate: 3%
- Portfolio Volatility: 8%
By inputting these values into the calculator, you can determine the Sortino Ratio for your portfolio. After performing the calculation, we find that the Sortino Ratio is approximately 1.38.
Illustrative Table Example
Consider the following table, which demonstrates the Sortino Ratio calculation for multiple investment portfolios:
Portfolio Return | Risk-Free Rate | Portfolio Volatility | Sortino Ratio |
|---|---|---|---|
| 12% | 3% | 8% | 1.38 |
| 8% | 2% | 6% | 0.95 |
| 10% | 4% | 7% | 1.00 |
The Sortino Ratio Calculator is a valuable tool for assessing the risk-adjusted performance of your investment portfolio. By using this calculator, you can calculate the Sortino Ratio and gain insights into the risk-return profile of your investments. Follow the provided instructions and formulas to accurately calculate and interpret the Sortino Ratio results.
