Asked Dec 10, 2019

I made a portfolio on stock track and my sharoe ratio is 3.29, alpha is -2.74, and my beta is 0.86.  What do those numbers tell me about my resume?  


Expert Answer

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Step 1

Sharpe Ratio:


Sharpe ratio is a method to evaluate the risk-adjusted return. It helps the investors in the comparison of return of a portfolio to the risks of that portfolio. The high Sharpe ratio indicates the high profitability of a portfolio. If the Sharpe ratio is greater than 1 then it indicates that the portfolio is good, if greater than 2 then it indicates that the portfolio is very good, and if greater than 3 then it indicates that the portfolio is excellent.


3.29 Sharpe ratio indicates that this is an excellent portfolio.

Step 2



Beta represents the systematic risk of a portfolio that is evaluated on the past performance of the portfolio. If the beta is equal to or more than 1 then it indicates that the portfolio has more systematic risk than the market while less than 1 that indicates the portfolio has systematic risk than the market.


0.86 beta is less than which indicates that this portfolio has less systematic risk than the market.


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