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What is Sharpe Ratio?

The Sharpe ratio is an investment measurement that is used to calculate the average return beyond the risk free rate of volatility per unit. In other words, it’s a calculation that measures the actual return of an investment adjusted for the riskiness of the investment.This measurement is particularly important when comparing two or more investment opportunities because it levels out the volatility in the market and flattens out the returns as if the risk was eliminated.