How to Annualize a Sharpe Ratio

Sharpe Ratios are equal to the effective return divided by the standard deviation. Commonly, Sharpe Ratios on a daily, weekly or monthly basis are annualized by multiplying by the square root of the higher frequency time period. This is because…

Hedge funds traditionally use benchmarks like the Sharpe Ratio and Sortino Ratio to gauge the risk-efficiency of portfolios. The Sharpe Ratio is the effective return of a risky asset per unit of risk (i.e variance), while the Sortino Ratio is…