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04-finding-alpha May 2, 2026

What is the Sharpe ratio in two lines?

The Sharpe Ratio — definition">Sharpe ratio measures risk-adjusted return: how much excess return you earn per unit of total risk taken. [3]

$$S = \frac{E[R_p] - R_f}{\sigma_p}$$

Use it to evaluate your overall portfolio's performance. [2]

Sources cited