Sharpe Ratio - Stocktrades Canada

Hello:
When analyzing stocks do you put much weight into the Sharpe ratio. From what I see online it is a fairly good metric to determine the risk of an equity as quoted below. Do you use this metric when analyzing stock pics as I few I have looked at fall below 1.0.

Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors.
A ratio higher than 2.0 is rated as very good.
A ratio of 3.0 or higher is considered excellent.
A ratio under 1.0 is considered sub-optimal.

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Asked on November 5, 2024 10:36 am

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Private answer

Hey there. Sharpe is an excellent ratio to judge risk-adjusted returns yes. I do use it to analyze stocks, but I don't put too much weight into it because it is backwards looking, and the vast majority of my investment research will be based on forward looking metrics.

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Posted by Dan Kent

Answered on November 7, 2024 8:54 pm

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Thanks Dan

(bpl521@outlook.com at November 8, 2024 2:15 pm)

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