100 Highest Sharpe Ratio Stocks List this 2022

The goal of most investors is to either: – Maximize returns given a fixed level of risk – Minimize risk given a particularly level of desired returns

What Is The Sharpe Ratio?

The Sharpe ratio is the financial industry’s favorite measure of risk-adjusted returns. It tells investors whether they are being appropriately rewarded for the risks they’re assuming in their investments.

There are three components to the Sharpe Ratio calculation.

– Investment return – Risk free rate of return – Investment standard deviation

For most investors, a suitable Risk-free rate of return is the current yield on 10-year U.S. government bonds.

For this article, we have used a risk free rate of 0, as interest rates have declined significantly.

For our purposes here, the Investment return can be either a historical return or an expected annual return. It is expressed using a decimal; for example, 0.51 would represent a 51% return.

We employ the calculated Investment standard deviation, usually based on daily variations, to take into account periodic fluctuations in the investment due to such things as dividends and stock splits.