Risk-Adjusted Return

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Dictionary Says

Definition of 'Risk-Adjusted 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. Risk-adjusted returns are applied to individual securities and investment funds and portfolios. 
Investopedia Says

Investopedia explains 'Risk-Adjusted Return'

There are five principal risk measures: alpha, beta, r-squared, 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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'Risk-Adjusted Return'

  • Series 65 Study Guide - Quantitative Methods of Evaluating ...

    http://www.investopedia.com/exam-guide/series-65/quantitative-methods/rates-of-return-internal-rate-of-return.asp
    ... Risk-adjusted return - this calculation allows an investor to determine if the
    amount of return received is commensurate with the risk taken. ...

  • Series 66 Study Guide - Quantitative Methods - Rates of Return ...

    http://www.investopedia.com/exam-guide/series-66/quantitative-methods/rates-return.asp
    ... Risk-adjusted return - This calculation allows an investor to determine if the
    amount of return received is commensurate with the risk taken. ...

  • 5 Ways To Measure Mutual Fund Risk

    http://www.investopedia.com/articles/mutualfund/112002.asp
    ... It takes the volatility (price risk) of a security or fund portfolio and compares
    its risk-adjusted performance to a benchmark index. The excess return of the ...

  • Scoring Risk-Return Data | Investopedia

    http://www.investopedia.com/university/quality-mutual-fund/chp4-fund-risk-return/scoring-data.asp
    ... With mutual fund risk-return classifications, as well as other types ... Morningstar's
    well-known star ratings reflect historical risk-adjusted performance and are ...

  • Pursuing Alpha In A Well-Diversified IRA

    http://www.investopedia.com/articles/retirement/08/IRA-alpha.asp
    ... Alpha is effectively the component of risk-adjusted return that is not explained
    by beta, and a positive alpha indicates successful risk-adjusted performance. ...

  • Measure Your Portfolio's Performance

    http://www.investopedia.com/articles/08/performance-measure.asp
    ... Instead, it's the one with the most superior risk-adjusted return, or in this case
    the fund headed by manager X. Unlike the Treynor measure, the Sharpe ratio ...

  • Understanding The Sharpe Ratio

    http://www.investopedia.com/articles/07/sharpe_ratio.asp
    ... if manager A, who produced the 15% return, took much larger risks than manager B,
    it may actually be the case that manager B has a better risk-adjusted return. ...

  • Backtesting: Interpreting The Past

    http://www.investopedia.com/articles/trading/05/030205.asp
    ... Risk-adjusted return - Percentage return as a function of risk. Typically,
    backtesting software will have two screens that are important. ...

  • 5 Ways To Rate Your Portfolio Manager

    http://www.investopedia.com/articles/stocks/11/5-ways-to-measure-money-managers.asp
    ... Based on the need to accurately measure performance, various ratios are used to
    determine the risk-adjusted return of an investment portfolio. ...

  • Using Economic Capital To Determine Risk

    http://www.investopedia.com/articles/economics/08/economic-capital.asp
    ... An example of performance measure that involves EC is return on risk adjusted capital
    (RORAC), risk adjusted return on capital (RAROC) and economic value added ...

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