Sharpe Ratio

Excess return over the risk-free rate divided by volatility — the standard measure of risk-adjusted performance. A Sharpe above 1 over long periods is considered strong for most strategies.

Go deeper

This term comes up constantly in asset management interviews and on the desk.

Hedge Fund interview prep

Related Asset Management terms

Go further than reading

The written material is free. These are the ways to get it applied to your own work.

Browse the full glossary — 150+ finance recruiting and technical terms, in plain English.