Treynor Ratio

Another measure of risk-adjusted return, the Treynor Ratio takes the return on an asset or portfolio and subtracts the risk-free rate from it. The result is then divided by the assets market risk, as measured by Beta.

Arguably, Treynor takes a more focused view of risk than the Sharpe Ratio by adjusting the returns for market risk measured by beta rather than total risk measured by standard deviation.

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