Portfolio Risk & Return

Risk-Free Rate

The return available with essentially no risk — in practice, the yield on short-term US Treasury bills. It is the hurdle every risk-adjusted measure starts from: the Sharpe, Sortino and Treynor ratios all count only the return above it, because earning 4% by taking stock-market risk is no achievement in a year when a Treasury bill paid 4% without any. When the risk-free rate rises, all of those ratios fall for the same portfolio, so comparisons are only fair at the same rate. Meridian’s analysis settings set the rate used.

Educational information, not investment advice. See it applied across the screener →