Sortino Ratio Formula - Finance
Learn the sortino ratio formula with examples, step-by-step guide, and calculator tools. Evaluate investment performance focusing only on downside risk, making it more relevant for investors concerned about losses
The sortino ratio formula is a fundamental concept in finance. Evaluate investment performance focusing only on downside risk, making it more relevant for investors concerned about losses. This page provides a comprehensive guide with worked examples and practical applications.
The Formula
Variables
Step-by-Step Guide
- 1
Step 1: Gather your data values
- 2
Step 2: Apply the formula
- 3
Step 3: Perform the calculations
- 4
Step 4: Interpret the result
Examples
Example 1
Example 1: [0.12,0.03,0.08] → Sortino Ratio = (12% portfolio return - 3% risk-free rate) / 8% downside deviation = 1.125
Example 2
Example 2: 1.125
Frequently Asked Questions
What is the sortino ratio formula?
Evaluate investment performance focusing only on downside risk, making it more relevant for investors concerned about losses
How do I calculate sortino ratio formula?
Use the formula: S = \frac{R_p - R_f}{\sigma_d}. Follow the steps provided above.
What tools can help with sortino ratio formula?
We provide online calculators: npv-calculator, irr-calculator, business-loan-calculator