In
finance, the
Sharpe ratio (also known as the
Sharpe index, the
Sharpe measure, and the
reward-to-variability ratio) is a way to examine the performance of an investment by adjusting for its
risk. The ratio measures the
excess return (or
risk premium) per unit of deviation in an investment asset or a trading strategy, typically referred to as risk (and is a
deviation risk measure), named after
William F. Sharpe.