Sterling Ratio Formula - Finance
Learn the sterling ratio formula with examples, step-by-step guide, and calculator tools. Evaluate managed account performance using average of largest drawdowns rather than single worst-case scenario
The sterling ratio formula is a fundamental concept in finance. Evaluate managed account performance using average of largest drawdowns rather than single worst-case scenario. 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: [0.12,0.03,0.1] → Sterling Ratio = (12% portfolio return - 3% risk-free rate) / 10% average drawdown = 0.9
Example 2
Example 2: 0.9
Frequently Asked Questions
What is the sterling ratio formula?
Evaluate managed account performance using average of largest drawdowns rather than single worst-case scenario
How do I calculate sterling ratio formula?
Use the formula: SR = \frac{R_p - R_f}{\text{Average Drawdown}}. Follow the steps provided above.
What tools can help with sterling ratio formula?
We provide online calculators: npv-calculator, irr-calculator, sip-calculator