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What is the difference between Treynor ratio and Sharpe ratio in the context of cryptocurrency investments?

avatarDayal RawalDec 26, 2021 · 3 years ago1 answers

Can you explain the difference between Treynor ratio and Sharpe ratio and how they are applied in the context of cryptocurrency investments?

What is the difference between Treynor ratio and Sharpe ratio in the context of cryptocurrency investments?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    The Treynor ratio and Sharpe ratio are two popular risk-adjusted performance measures used in the field of finance. The Treynor ratio measures the excess return of an investment per unit of systematic risk, while the Sharpe ratio measures the excess return per unit of total risk. In the context of cryptocurrency investments, the Treynor ratio can be used to assess the risk-adjusted performance of a portfolio by considering the systematic risk associated with cryptocurrencies. On the other hand, the Sharpe ratio provides a more comprehensive measure of risk-adjusted performance by taking into account both systematic and unsystematic risk. By comparing the two ratios, investors can evaluate the risk-return tradeoff of different cryptocurrency investments and make informed decisions based on their risk tolerance and investment objectives.