DEFINITION of 'Treynor Index'
A measure of riskadjusted performance of an investment portfolio. The Treynor Index measures a portfolio's excess return per unit of risk, using beta as the risk measure; the higher this number, the greater "excess return" being generated by the portfolio. The index was developed by economist Jack Treynor.
Also known as the Treynor Ratio.
INVESTOPEDIA EXPLAINS 'Treynor Index'
Like the Sharpe ratio  which uses standard deviation rather than beta as the risk measure  the fundamental premise behind the Treynor Index is that investment performance has to be adjusted for risk, in order to convey an accurate picture of performance.
For example, assume Portfolio Manager A achieves a portfolio return of 8% in a given year, when the riskfree rate of return is 5%; the portfolio had a beta of 1.5. In the same year, Portfolio Manager B achieved a portfolio return of 7%, with a portfolio beta of 0.8.
The Treynor Index is therefore 2.0 for A, and 2.5 for B. While Portfolio Manager A exceeded B's performance by a percentage point, Portfolio Manager B actually had the better performance on a riskadjusted basis.

Return On Investment  ROI
A performance measure used to evaluate the efficiency of an investment ... 
Sharpe Ratio
A ratio developed by Nobel laureate William F. Sharpe to measure ... 
Index
A statistical measure of change in an economy or a securities ... 
Capital Market Line  CML
A line used in the capital asset pricing model to illustrate ... 
Treynor Ratio
A ratio developed by Jack Treynor that measures returns earned ... 
Beta
A measure of the volatility, or systematic risk, of a security ...

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