DEFINITION of 'RiskAdjusted Return'
A concept that refines an investment's return by measuring how much risk is involved in producing that return, which is generally expressed as a number or rating. Riskadjusted returns are applied to individual securities and investment funds and portfolios.
INVESTOPEDIA EXPLAINS 'RiskAdjusted Return'
There are five principal risk measures: alpha, beta, rsquared, standard deviation and the Sharpe ratio. Each risk measure is unique in how it measures risk. When comparing two or more potential investments, an investor should always compare the same risk measures to each different investment in order to get a relative performance perspective.
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RELATED FAQS

What is a good Sharpe ratio?
The Sharpe ratio is a wellknown and wellreputed measure of riskadjusted return on investment, developed by William Sharpe. ... Read Full Answer >> 
What are the primary sources of market risk?
Market risk is the risk of loss due to the factors that affect an entire market or asset class. Market risk is also known ... Read Full Answer >> 
How does beta measure a stock's market risk?
Beta is a statistical measure of the volatility of a stock versus the overall market. It's generally used as both a measure ... Read Full Answer >> 
How does the risk of investing in the electronics sector compare to the broader market?
The risk of investing in the electronics sector closely approximates the risk of investing in the broader market. The electronics ... Read Full Answer >> 
How much of a diversified portfolio should be invested in the electronics sector?
The electronics sector tracks closely with the broader market, making it a cyclical sector with average volatility. Electronics ... Read Full Answer >> 
What are some common questions an interviewer may ask during an interview for a position ...
When interviewing for a job at an investment bank, a candidate is likely to answer questions about his career and education ... Read Full Answer >>
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