Risk Adjusted Return Calculator

Risk-adjusted returns compare strategies on apples-to-apples basis.

Expected return %

Risk-free rate %

Expected volatility %

Sharpe ratio

0.53

Excess return %

0.08%

Risk category

Moderate

How the math works

Sharpe = (return − risk-free) / volatility.

12% − 4% = 8% excess / 15% volatility = 0.53 Sharpe. Moderate.

How to Use

Enter expected return %.
Enter risk-free rate %.
Enter expected volatility %.
Read risk-adjusted return metric.

Frequently Asked Questions

Sharpe ratio?

Sharpe = (return − risk-free) / volatility. Standard measure. Higher = better return per unit of risk. Real estate Sharpe typically 0.5-1.5; stocks 0.3-0.8. Real estate has smoothed returns that mask true volatility.

Real estate volatility?

Appraisal-based returns: low volatility (8-12%). Transaction-based (RCA Index): higher (15-20%). Public REITs: highest (20-30%). True underlying risk probably 15-18% volatility. Use transaction-based for realistic Sharpe.

Target Sharpe?

Core fund: 0.8-1.2. Value-add: 0.6-1.0. Opportunistic: 0.4-0.8 (higher return, much higher vol). Debt: 1.0-1.5. Each strategy has expected risk/return profile.

What does competitive benchmarking look like?

Pull 3-5 comparable properties or units in your submarket from CoStar, Yardi, CIM, or your local broker. Normalize by unit type, class, and age. Your outputs should fall within one standard deviation of the comp-set mean. Outliers are either opportunities or warning signs — dig into why. Monthly benchmarking keeps your portfolio on-market and pricing sharp.