Treynor Ratio Calculator: Measure Portfolio Returns Adjusted for Market Risk

Investors want to know not just returns, but how well a portfolio compensates for the market risk it takes. The Treynor Ratio evaluates risk-adjusted returns using systematic risk (beta) rather than total risk.

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Our Treynor Ratio Calculator allows you to instantly calculate whether your portfolio is generating efficient returns relative to market risk.

What is the Treynor Ratio?

The Treynor Ratio measures excess return per unit of market risk (beta). It is a variation of the Sharpe Ratio but focuses only on systematic risk, which is the risk of the overall market.

Treynor Ratio Formula: Treynor Ratio=Portfolio Return−Risk-Free RatePortfolio Beta\text{Treynor Ratio} = \frac{\text{Portfolio Return} – \text{Risk-Free Rate}}{\text{Portfolio Beta}}Treynor Ratio=Portfolio BetaPortfolio Return−Risk-Free Rate

Portfolio Return: Expected return of your investment.
Risk-Free Rate: Return of a risk-free investment (like government bonds).
Beta: Sensitivity of your portfolio to market movements.

A higher Treynor Ratio indicates better compensation for market risk.

How to Use the Treynor Ratio Calculator

Enter Portfolio Return (%).
Enter Risk-Free Rate (%).
Enter Portfolio Beta.
Click Calculate.

The calculator shows the Treynor Ratio and a color-coded indicator:

Treynor Ratio	Interpretation	Indicator
≥ 1	Excellent: High risk-adjusted return	✅ Green
0.5 – 0.99	Moderate: Acceptable return	⚠️ Orange
< 0.5	Low: Poor risk-adjusted return	❌ Red

Example:

Portfolio Return = 12%
Risk-Free Rate = 6%
Beta = 0.8

Treynor=12−60.8=7.5Treynor = \frac{12 – 6}{0.8} = 7.5Treynor=0.812−6=7.5

✅ Excellent: Your portfolio delivers strong returns for the market risk taken.

Why the Treynor Ratio Matters

For Investors: Compares portfolios based on compensation for market risk.
For Portfolio Managers: Identify if portfolio returns justify systematic risk.
For Analysts: Useful when comparing diversified portfolios exposed to market movements.

A high Treynor Ratio indicates efficient market risk management.

Key Takeaways

The Treynor Ratio evaluates portfolio performance relative to market risk.
Higher Treynor = better compensation for beta risk.
Use it alongside Sharpe Ratio, ROE, ROA, and PEG for comprehensive analysis.

Try the Treynor Ratio Calculator Now

Use our Treynor Ratio Calculator to quickly evaluate your portfolio’s market risk-adjusted returns. Make informed decisions by understanding how well your portfolio rewards the market risk you take.