Sharpe Ratio

Measure the risk-adjusted performance, i.e. excess return per unit of risk. by taking into account an investor can earn the risk-free rate. The higher values, the better the return-risk tradeoff.

Sharpe ratio = (r_p- r_f)/ σ_p

Where:
r_p – portfolio return
r_f – risk free rate
σ_p– portfolio standard deviation