risk adjusted return


A measure of how much an investment returned in relation to the amount of risk it took on. Often used to compare a high-risk, potentially high-return investment with a low-risk, lower-return investment.

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You should try to calculate your risk adjusted return and figure out if it is worth taking on before you start.

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There was a risk adjusted return and it was decided by the amount of risk it took on and it really interested me a lot.

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risk adjusted returns have limited value in general. After all you can only eat returns, not risk adjusted returns. Maybe they can be helpful when comparing to very similar funds or investments but using risk-adjusted returns alone as the deciding factor is not a great idea.

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risk adjusted rate of return risk adjusted return on capital (RAROC)