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 mutual funds can be used for investing in the industrial sector?
The industrial goods sector provides investors access to companies that engage in activities such as aerospace and defense, ... Read Full Answer >> 
What is the difference between a custodian bank and a mutual fund custodian?
Custodian banks and mutual fund custodians, commonly known as mutual fund corporations, perform very similar roles for different ... Read Full Answer >> 
Who is the counterparty of a derivative?
The counterparty to a derivative is the party who takes the other side of the trade. Every derivative trade needs to have ... Read Full Answer >> 
What is affected by the interest rate risk?
Interest rate risk is the risk that arises when the absolute level of interest rates fluctuate. Interest rate risk directly ... Read Full Answer >> 
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Derivatives could be used in risk management by hedging a position to protect against the risk of an adverse move in an asset. ... Read Full Answer >>
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