What are Risk Adjusted Investment Returns?
Broken Pie Chart
English - December 02, 2018 19:09 - 19 minutes - 18.2 MB - ★★★★★ - 16 ratingsInvesting Business Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
Previous Episode: EP013: The Option Volatility Episode
In this episode Derek Moore discusses the concept of Risk-Adjusted Returns, Standard Deviation of Returns, Sortino Ratio, Risk Free Interest Rates. Plus, how to compare two investment returns against one another on a risk adjusted basis and why many investors might be using the wrong investor benchmarks against their portfolios.
Key Takeaways:
• What are risk adjusted investment returns? • What is the standard deviation of investment returns? • What is the Risk-Free Interest or Discount Rate? • Why do people use Treasury Bills or Treasury Bonds as the Risk-Free Rate? • What is the Sharpe Ratio? • How is the Sharpe Ratio calculated? • How is the Sharpe Ratio different than the Sortino Ratio? • How larger than expected upside investment returns can actually raise the standard deviation of portfolios • The pitfalls of using past historical returns to try and evaluate expected returns • Why do many investors always use the S&P 500 Index as the benchmark? • What would be a more appropriate way to choose investment benchmark indexes for comparison?
Mentioned in this Episode:
Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk
Sortino Ratio https://www.investopedia.com/terms/s/sortinoratio.asp
Sharpe Ratio https://www.investopedia.com/terms/s/sharperatio.asp