Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Sharpe ratio definition

The Sharpe ratio allows investors to calculate what returns are on offer for holding a higher-risk asset.

Sharpe ratio definition

The Sharpe ratio allows investors to calculate what returns are on offer for holding a higher-risk asset.

Specifically, it represents the excess return from the extra volatility of the riskier asset. Investors can use the Sharpe ratio to see if taking on a riskier asset is worthwhile, compared to holding a lower-risk or risk-free asset. The ratio was developed by William Sharpe in 1966, who was revered for his work on the capital asset pricing model.

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