What is the Sharp ratio？

The Sharpe ratio is a measure of risk-adjusted return, commonly used in finance. It is calculated by subtracting the risk-free rate of return from the expected return of an investment, and then dividing the result by the standard deviation of the investment's returns. The Sharpe ratio helps investors evaluate the potential return of an investment relative to its risk. A higher Sharpe ratio indicates that an investment is generating more return per unit of risk than a lower Sharpe ratio investment.