{"success":true,"version":"v1","request":{"tool":"get_calculator_schema","calculator_id":"sharpe-ratio"},"result":{"entity_type":"calculator","id":"sharpe-ratio","calculator_id":"sharpe-ratio","canonical_url":"https://tttkmbb.com/investing/sharpe-ratio","name":"Sharpe Ratio Calculator","title":"Sharpe Ratio Calculator – Risk-Adjusted Return with Annualization","category":"investing","category_name":"Investing & Real Estate","tool_name":"calculate_sharpe_ratio","featured_mcp_tool":false,"description":"Computes the Sharpe ratio of a portfolio from its return, the risk-free rate and the standard deviation of returns, annualizes it for monthly, weekly or daily data and gives a rule-of-thumb interpretation.","use_when":"You want to compare investments or strategies on return per unit of total risk, or annualize a Sharpe ratio measured on periodic data.","do_not_use_when":"You only care about downside risk (use a Sortino ratio) or the return per unit of market risk (Treynor ratio). Informational only; not financial advice.","inputs":[{"name":"portfolio_return_percent","label":"Portfolio return","type":"number","unit":"% per period","required":true,"min":-100,"max":1000,"description":"Average (or total) return of the portfolio per period in percent.","example":12},{"name":"risk_free_rate_percent","label":"Risk-free rate","type":"number","unit":"% per period","required":true,"min":-20,"max":100,"description":"Risk-free return over the same period in percent.","example":3},{"name":"standard_deviation_percent","label":"Standard deviation of returns","type":"number","unit":"% per period","required":true,"max":1000,"exclusive_min":0,"description":"Standard deviation of the portfolio's returns per period in percent.","example":15},{"name":"periods_per_year","label":"Periods per year","type":"integer","required":false,"default":1,"min":1,"max":366,"description":"1 for annual figures, 12 for monthly, 52 for weekly, 252 for trading-daily; the ratio is annualized by √periods.","example":1}],"outputs":[{"name":"sharpe_ratio","label":"Sharpe ratio (per period)","type":"number","decimals":4,"description":"(portfolio_return − risk_free_rate) / standard_deviation."},{"name":"annualized_sharpe_ratio","label":"Annualized Sharpe ratio","type":"number","decimals":4,"description":"sharpe_ratio × √periods_per_year (equal to sharpe_ratio for annual data)."},{"name":"excess_return_percent","label":"Excess return","type":"number","unit":"%","decimals":2,"description":"portfolio_return − risk_free_rate per period."},{"name":"interpretation","label":"Interpretation","type":"string","decimals":4,"description":"Rule of thumb applied to the annualized ratio: below 1 sub-optimal, 1–2 acceptable, 2–3 very good, above 3 excellent."}],"input_schema":{"type":"object","properties":{"portfolio_return_percent":{"description":"Average (or total) return of the portfolio per period in percent. Unit: % per period.","type":"number","minimum":-100,"maximum":1000,"examples":[12],"x-unit":"% per period"},"risk_free_rate_percent":{"description":"Risk-free return over the same period in percent. Unit: % per period.","type":"number","minimum":-20,"maximum":100,"examples":[3],"x-unit":"% per period"},"standard_deviation_percent":{"description":"Standard deviation of the portfolio's returns per period in percent. Unit: % per period.","type":"number","maximum":1000,"exclusiveMinimum":0,"examples":[15],"x-unit":"% per period"},"periods_per_year":{"description":"1 for annual figures, 12 for monthly, 52 for weekly, 252 for trading-daily; the ratio is annualized by √periods.","type":"integer","minimum":1,"maximum":366,"default":1,"examples":[1]}},"additionalProperties":false,"required":["portfolio_return_percent","risk_free_rate_percent","standard_deviation_percent"]},"output_schema":{"type":"object","properties":{"sharpe_ratio":{"description":"(portfolio_return − risk_free_rate) / standard_deviation.","type":"number"},"annualized_sharpe_ratio":{"description":"sharpe_ratio × √periods_per_year (equal to sharpe_ratio for annual data).","type":"number"},"excess_return_percent":{"description":"portfolio_return − risk_free_rate per period. Unit: %.","type":"number","x-unit":"%"},"interpretation":{"description":"Rule of thumb applied to the annualized ratio: below 1 sub-optimal, 1–2 acceptable, 2–3 very good, above 3 excellent.","type":"string"}}},"formula":"sharpe_ratio = (portfolio_return_percent − risk_free_rate_percent) / standard_deviation_percent; annualized_sharpe_ratio = sharpe_ratio × √periods_per_year","method":"Ex-post Sharpe ratio (Sharpe 1994) with the risk-free rate as benchmark; √t annualization assumes independent, identically distributed period returns. Informational mathematics only; not financial advice.","sources":[{"name":"Sharpe W. F. (1994) The Sharpe Ratio, Journal of Portfolio Management 21(1):49-58","url":"https://web.stanford.edu/~wfsharpe/art/sr/sr.htm","type":"peer_reviewed","retrieved_at":"2026-09-24"},{"name":"Wikipedia – Sharpe ratio","url":"https://en.wikipedia.org/wiki/Sharpe_ratio","type":"reference","retrieved_at":"2026-09-24"}],"freshness":{"type":"static","max_age_seconds":null,"note":"Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output."},"examples":[{"name":"12 % return, 3 % risk-free, 15 % volatility (annual)","inputs":{"portfolio_return_percent":12,"risk_free_rate_percent":3,"standard_deviation_percent":15},"expected":{"sharpe_ratio":0.6,"annualized_sharpe_ratio":0.6,"excess_return_percent":9,"interpretation":"Sub-optimal (below 1)"},"url":"https://tttkmbb.com/api/v1/calculate/sharpe-ratio?portfolio_return_percent=12&risk_free_rate_percent=3&standard_deviation_percent=15"},{"name":"Monthly data: 1 % return, 0.25 % risk-free, 3 % deviation","inputs":{"portfolio_return_percent":1,"risk_free_rate_percent":0.25,"standard_deviation_percent":3,"periods_per_year":12},"expected":{"sharpe_ratio":0.25,"annualized_sharpe_ratio":0.866,"excess_return_percent":0.75},"url":"https://tttkmbb.com/api/v1/calculate/sharpe-ratio?portfolio_return_percent=1&risk_free_rate_percent=0.25&standard_deviation_percent=3&periods_per_year=12"}],"faq":[{"q":"Which risk-free rate should I use?","a":"A government bill yield over the same period as the returns: an annual yield for annual data, or the yield divided by 12 for monthly data."},{"q":"Can the Sharpe ratio be negative?","a":"Yes, when the portfolio returned less than the risk-free rate. Negative ratios are not comparable with each other because a higher deviation then makes the ratio look better."}],"tags":["sharpe ratio","risk adjusted return","excess return","volatility","portfolio performance"],"related":[{"calculator_id":"max-drawdown","reason":"A drawdown-based view of the same portfolio's risk."},{"calculator_id":"descriptive-statistics","reason":"Compute the mean and standard deviation of a return series first."},{"calculator_id":"capm","reason":"Expected return implied by beta rather than realised performance."}],"links":{"html":"https://tttkmbb.com/investing/sharpe-ratio","markdown":"https://tttkmbb.com/investing/sharpe-ratio.md","json":"https://tttkmbb.com/investing/sharpe-ratio.json","api":"https://tttkmbb.com/api/v1/calculate/sharpe-ratio","schema":"https://tttkmbb.com/api/v1/calculators/sharpe-ratio","openapi":"https://tttkmbb.com/openapi.json","mcp":"https://tttkmbb.com/mcp"},"version":"v1","updated_at":"2026-09-24"},"timestamp":"2026-09-24T03:48:40Z"}