Since the Sharpe ratio was derived in 1966 by William Sharpe, it has been one of the most referenced risk/return measures used in finance, and much of this popularity can be attributed to its simplicity. The ratio's credibility was boosted further when Professor Sharpe won a Nobel Memorial Prize in Economic Sciences in 1990 for his work on the capital asset pricing model (CAPM). In this article, we'll show you how this historic thinker can help bring you profits. (To find out more on this subject, see The Capital Asset Pricing Model: An Overview and The Sharpe Ratio Can Oversimplify Risk.)
There's an Excel spreadsheet here which will help you calculate the Sharpe Ratio
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