The Treynor ratio, also known as the reward-to-volatility ratio, is a metric for returns that exceed those that might have been gained on a risk-less investment, per each unit of market risk. The Treynor ratio, developed by Jack Treynor, is calculated as follows:
(Average Return of a Portfolio – Average Return of the Risk-Free Rate)/Beta of the Portfolio
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Treynor Ratio
What is the 'Treynor Ratio'
<span>The Treynor ratio, also known as the reward-to-volatility ratio, is a metric for returns that exceed those that might have been gained on a risk-less investment, per each unit of market risk. The Treynor ratio, developed by Jack Treynor, is calculated as follows: (Average Return of a Portfolio – Average Return of the Risk-Free Rate)/Beta of the Portfolio
BREAKING DOWN 'Treynor Ratio'
In essence, the Treynor ratio is a risk-adjusted measurement of a return, based on systematic risk. It is a metric of Summary
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