Overview

The Sharpe Ratio Template calculates the Ratio for portfolios that have different expected returns, standard deviations and expected returns. It also plots the resultant Sharpe ratios in a line graph to show the risk-return relationship of the various portfolios. The Sharpe Ratio is a widely used ratio to gauge the performance of an investment using a risk-adjusted return. The formula for the Sharpe Ratio is the following:

Sharpe Ratio = (Rp – Rf) / (StdDev Rp)

Where:

Rp = Expected return of the portfolio

Rf = Risk-Free Rate of Return

StdDev Rp = Is the Standard Deviation of Portfolio Returns (volatility)

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