Investing & Markets

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Novice

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Concept 13 of 21

framework

Sharpe and Sortino ratios

Two ways of asking, am I being paid enough for the bumps I am sitting through?

Definition

Metrics of risk adjusted return. Sharpe divides excess return by total volatility; Sortino divides only by downside volatility.

Step 1

Predict first

In one or two sentences, what do you think this concept means? Wrong is fine; the small struggle is what makes the answer stick.