# Calculate Sharpe Ratio of Portfolio in Excel (with MarketXLS)

Sharpe ratio is one of the most commonly used ratios to measure the reward versus risk of an investment opportunity. In this article, we will learn about what Sharpe Ratio is, how it is calculated, and how to calculate the Sharpe Ratio of Portfolio in Excel using MarketXLS.

Download Portfolio Sharpe Ratio Excel Template

### What is Sharpe Ratio?

The Sharpe ratio was developed by Nobel laureate William F. Sharpe, and is a measure for calculating risk-adjusted return of an asset. Hence, it is calculated as the mean returns earned by an asset or a portfolio in excess of the risk-free rate per unit of volatility.

The higher the Sharpe Ratio, the better the portfolio or fund has performed in proportion to the risk taken by it.

**Sharpe ratio = (Average Portfolio Returns – Risk-Free rate)/Standard Deviation of Portfolio**

If the Sharpe ratio of a portfolio is 1.3 per annum, it implies 1.3% excess returns for 1% volatility.

Let’s say an investor earns a return of 6% on his portfolio that has a volatility of 0.6. Assuming a risk-free rate of 4.2%, the Sharpe ratio is (6% – 4.2%)/0.6 = 3.

### Importance of Sharpe Ratio

Below are a few important points about Sharpe ratio:

- The higher the Portfolio’s Sharpe ratio, the better the risk-adjusted performance. For this reason, investors are advised to pick stocks or funds with higher Sharpe ratio.
- Investors can alter their portfolio’s Sharpe ratio by either increasing the returns or by decreasing the risk taken.
- It is also a good measure to compare funds or indexes with similar returns, or to compare investments with similar risk profile.

### Calculate Sharpe Ratio of Portfolio in Excel

Especially relevant is that we can calculate Sharpe ratio of portfolio in Excel using MarketXLS functions. To do so, we have created a template, where you can enter your stock portfolio and it will automatically calculate the Sharpe Ratio of the portfolio. Also, the template is flexible and we can extend it to calculate Sharpe ratio of any portfolio.

Let us review the steps involved in calculating Sharpe Ratio of Portfolio in Excel.

** 1. Get Daily Stock Prices**

Get daily stock prices for the last one year for each stock in your portfolio. To do this, simply add the stock symbols in excel, select the cells containing the symbols, and then press the ‘**1 Year Data**’ button in the MarketXLS panel.

** 2. Calculate Daily Returns**

Calculate daily returns for the period using the following formula:

*Daily Return = (Price 1 – Price 0) / Price 0*

** 3. Calculate Standard Deviation**

Calculate the standard deviation of each stock. Furthermore, we can do this using the Excel function STDEV() and apply it to the daily returns:

*Standard Deviation of Stock = STDEV(Daily Returns)*

Finally, standard deviation can be annualized by multiplying with with the square root of 252.

* 4. Prepare Correlation Matrix*

*4. Prepare Correlation Matrix*

Since we have a 3 stock portfolio, we can use the correlation matrix to calculate the portfolio variance. To calculate correlation between each pair of stocks, we will use the Excel’s CORR() function.

** 5. Calculate Annual Volatility**

Once we have the stock’s individual volatility and correlation matrix, we can calculate the annual volatility of the portfolio using the following formula:

This will give us the annual variance. Then we will calculate the annual volatility as the square root of annual variance.

** 6. Calculate Sharpe Ratio**

Now we can calculate the Sharpe ratio using the following formula:

*Sharpe ratio = (Average Portfolio Returns – Risk-Free rate)/Standard Deviation of Portfolio*

**Buy the Sharpe Ratio Template for $9 here.**

## targeted visitors

August 29, 2018 at 7:29 pmtargeted visitors[…]although sites we backlink to below are considerably not connected to ours, we feel they may be really really worth a go via, so have a look[…]

## mcat cars importance

August 30, 2018 at 1:58 pmmcat cars importance[…]one of our visitors just lately encouraged the following website[…]

## 123klussers.nl

September 1, 2018 at 12:59 am123klussers.nl[…]Every after in a when we decide on blogs that we read. Listed below would be the latest websites that we opt for […]

## silicone dildo

September 2, 2018 at 10:34 amsilicone dildo[…]The information talked about inside the write-up are some of the very best obtainable […]

## interracial porn online

September 4, 2018 at 10:20 aminterracial porn online[…]the time to study or pay a visit to the content material or web sites we’ve linked to beneath the[…]

## tiket pesawat murah

September 5, 2018 at 3:05 amtiket pesawat murah[…]just beneath, are several absolutely not associated web pages to ours, however, they are certainly really worth going over[…]

## benwa balls

September 5, 2018 at 4:57 pmbenwa balls[…]one of our guests not long ago proposed the following website[…]

## Diccionario de regionalismos

September 6, 2018 at 9:41 amDiccionario de regionalismos[…]check beneath, are some absolutely unrelated sites to ours, nonetheless, they are most trustworthy sources that we use[…]

## http://www.hunnitbrand.com

September 10, 2018 at 10:59 amhttp://www.hunnitbrand.com[…]we prefer to honor several other world wide web internet sites around the internet, even though they arent linked to us, by linking to them. Underneath are some webpages worth checking out[…]

## FS19 mods

September 12, 2018 at 7:55 pmFS19 mods[…]below you will find the link to some internet sites that we think you should visit[…]

## farming simulator 2019 mods

September 13, 2018 at 1:05 amfarming simulator 2019 mods[…]we came across a cool site that you simply may possibly love. Take a look when you want[…]

## porn podcast

September 13, 2018 at 8:55 amporn podcast[…]Here are a few of the sites we advocate for our visitors[…]

## Stepfamily Porn Online

September 14, 2018 at 8:13 amStepfamily Porn Online[…]always a major fan of linking to bloggers that I really like but dont get a whole lot of link appreciate from[…]

## Stepfamily Porn Online

September 14, 2018 at 11:59 amStepfamily Porn Online[…]here are some hyperlinks to web sites that we link to because we consider they may be worth visiting[…]

## Google

September 14, 2018 at 12:17 pmGoogleAlways a large fan of linking to bloggers that I love but dont get quite a bit of link enjoy from.

## Stepfamily Porn Online

September 14, 2018 at 6:54 pmStepfamily Porn Online[…]although web sites we backlink to beneath are considerably not connected to ours, we really feel they’re truly worth a go through, so have a look[…]

## Google

September 16, 2018 at 1:32 amGoogleAlthough sites we backlink to below are considerably not connected to ours, we really feel they are basically worth a go by way of, so possess a look.

## houses for sale in cerritos ca

September 16, 2018 at 9:13 amhouses for sale in cerritos ca[…]please pay a visit to the sites we adhere to, like this one particular, as it represents our picks in the web[…]

## xxnxx

September 16, 2018 at 9:00 pmxxnxx[…]we prefer to honor several other net web-sites around the net, even when they arent linked to us, by linking to them. Underneath are some webpages worth checking out[…]

## Dolce and Gabbana

September 17, 2018 at 12:23 amDolce and Gabbana[…]The details mentioned within the write-up are a few of the ideal accessible […]

## Jimmy Choo

September 17, 2018 at 11:08 amJimmy Choo[…]that is the finish of this article. Right here you will find some web sites that we believe youll enjoy, just click the links over[…]

## Givenchy

September 18, 2018 at 9:14 amGivenchy[…]very few websites that take place to be detailed beneath, from our point of view are undoubtedly effectively really worth checking out[…]

## best vibrator

September 18, 2018 at 11:43 ambest vibrator[…]please visit the internet sites we follow, including this one, because it represents our picks through the web[…]

## Web development services

September 20, 2018 at 9:22 amWeb development services[…]Here is an excellent Blog You may Find Interesting that we Encourage You[…]