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.

Sharpe Ratio
A ratio developed by Nobel laureate William F. Sharpe to measure ... 
William F. Sharpe
An American economist who won the 1990 Nobel Prize in Economics, ... 
Terminal Capitalization Rate
A rate used to estimate the resale value of a property at the ... 
Modified Sharpe Ratio
A ratio used to calculate the riskadjusted performance of an ... 
Return
The gain or loss of a security in a particular period. The return ... 
Risk Discount
A situation where a particular investor, either an individual ...

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Investors use expected return to evaluate the potential gain or loss resulting from investing capital in a particular security ... Read Full Answer >> 
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What does a high turnover ratio signify for an investment fund?
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What is the difference between passive and active asset management?
Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>

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