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Information Ratio Calculator

Calculate information ratio for active portfolio management.

Developer & Financial Tools

Information Ratio Calculator

Measure risk-adjusted excess returns for active portfolio management

Input Method

Direct Calculation

Portfolio return minus benchmark return

Standard deviation of excess returns

Return Series Calculation

Results

Information Ratio

Excess Return

Average excess return

Tracking Error

Standard deviation

Information Ratio Benchmarks

Additional Analysis

Average Portfolio Return

Average Benchmark Return

Number of Periods

Formula & Explanation

Information Ratio Formula

Information Ratio = Excess Return / Tracking Error

Where Excess Return = Average Portfolio Return - Average Benchmark Return
And Tracking Error = Standard Deviation of Excess Returns

What It Measures

  • Risk-adjusted excess return generated by active management
  • Consistency of outperformance relative to benchmark
  • Manager's ability to generate alpha per unit of tracking error
  • Quality of active management decisions

Interpretation Guidelines

Information Ratio Values:
  • > 0.75: Excellent active management
  • 0.5 - 0.75: Good active management
  • 0.25 - 0.5: Reasonable active management
  • < 0.25: Poor active management
Key Insights:
  • Higher ratios indicate better risk-adjusted performance
  • Considers both return and consistency of outperformance
  • Negative ratios suggest underperformance
  • Compare ratios across similar strategies
v1.0.0.758733

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v1.0.0.758733