Treynor Ratio
Definition
A risk-adjusted performance measure that evaluates returns earned in excess of the risk-free rate per unit of market risk (beta).
Formula / Rules
Treynor Ratio = (R_p - R_f) / β_p
Example
Higher Treynor ratio indicates better compensation for systematic risk.
Related Terms
Frequently Asked Question
What is the Treynor Ratio?
The Treynor Ratio is a risk-adjusted performance measure that evaluates returns earned in excess of the risk-free rate per unit of market risk (beta). Formula: (R_p - R_f) / β_p.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.