How do Treynor and Sharpe ratios apply to evaluating the performance of digital assets?

3 answers

• Francis PallesenJan 19, 2025 · 7 months ago
  The Treynor and Sharpe ratios are commonly used to assess the performance of digital assets. The Treynor ratio measures the excess return earned per unit of systematic risk, while the Sharpe ratio measures the excess return earned per unit of total risk. These ratios take into account the risk-adjusted returns of digital assets, allowing investors to compare their performance relative to the level of risk taken. Factors considered in these ratios include the asset's beta, risk-free rate, and the asset's standard deviation. By evaluating these ratios, investors can make more informed decisions regarding the performance of digital assets.
  644

  322
• Mendez LancasterApr 13, 2023 · 2 years ago
  When it comes to evaluating the performance of digital assets, the Treynor and Sharpe ratios are valuable tools. The Treynor ratio focuses on the systematic risk of an asset, which is the risk that cannot be diversified away. On the other hand, the Sharpe ratio considers both systematic and unsystematic risk, providing a more comprehensive assessment of risk-adjusted returns. By using these ratios, investors can gain insights into the efficiency and riskiness of digital assets, helping them make better investment decisions.
  529

  177
• Farrell MirandaAug 01, 2025 · 18 days ago
  The Treynor and Sharpe ratios play a crucial role in evaluating the performance of digital assets. These ratios provide a quantitative measure of risk-adjusted returns, allowing investors to assess the efficiency and attractiveness of different assets. The Treynor ratio specifically looks at the excess return earned per unit of systematic risk, while the Sharpe ratio considers the excess return earned per unit of total risk. By analyzing these ratios, investors can identify digital assets that offer higher returns relative to the level of risk taken, helping them optimize their investment portfolios.
  607

  152