Daily Point 1994 - Information Ratio (IR)

 

The Banking Tutor

Daily Point 1994

Information Ratio (IR)

 Information Ratio (IR) is a financial ratio to measure the Risk Adjusted Return (RAR) of any scheme portfolio. It is often used as a measure of a portfolio manager’s level of skill and ability to generate excess returns, relative to a benchmark and also attempts to identify the consistency of the performance by incorporating standard deviation/risk factor into the calculation.

IR is calculated as: (Portfolio Rate of Returns - Benchmark Rate of Returns)/Standard Deviation of Excess Return.

 

Sekhar Pariti

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