Treynor Ratio Formula - Finance
Learn the treynor ratio formula with examples, step-by-step guide, and calculator tools. Assess portfolio performance relative to systematic market risk (beta), ideal for diversified portfolios
The treynor ratio formula is a fundamental concept in finance. Assess portfolio performance relative to systematic market risk (beta), ideal for diversified portfolios. 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: [0.12,0.03,1.2] → Treynor Ratio = (12% portfolio return - 3% risk-free rate) / 1.2 portfolio beta = 7.5%
Example 2
Example 2: 0.075
Frequently Asked Questions
What is the treynor ratio formula?
Assess portfolio performance relative to systematic market risk (beta), ideal for diversified portfolios
How do I calculate treynor ratio formula?
Use the formula: T = \frac{R_p - R_f}{\beta_p}. Follow the steps provided above.
What tools can help with treynor ratio formula?
We provide online calculators: npv-calculator, irr-calculator, sip-calculator