Free Treynor Ratio Calculator Online
Instantly calculate your Treynor ratio with our free tool. Enter return, risk-free rate, and beta for fast, accurate risk-adjusted performance results.
Risk-Adjusted Performance
*The Treynor Ratio measures investment performance adjusted for systematic risk (Beta). It assumes a diversified portfolio.
Frequently Asked Questions
Our free Treynor ratio calculator reveals how much return you earn per unit of risk. Use it to fine-tune your portfolio and speed up your FIRE savings goal.
A: Subtract the risk-free rate from your mean portfolio return to get the risk premium. Then divide that number by your portfolio beta. The result shows how much excess return you earn for each unit of systematic risk.
A: A higher Treynor ratio means better risk-adjusted performance. There's no fixed "good" number — compare your ratio against a benchmark or similar funds. A ratio above the market average signals strong reward per unit of risk.
A: Beta sits in the denominator, so a lower beta boosts your ratio for the same return. A higher beta pulls the ratio down, even if raw returns look strong. This is why the Treynor ratio rewards efficient risk-taking, not just high returns.
A: The Sharpe ratio uses total risk (standard deviation). The Treynor ratio uses only systematic risk (beta). Use Sharpe for a single, undiversified holding. Use Treynor for a diversified portfolio where unsystematic risk is already minimized.
A: The Treynor ratio assumes a diversified portfolio. Most analysts consider 20–30 stocks across sectors enough to diversify away unsystematic risk. Below that, the Sharpe ratio gives a more reliable picture.
A: Yes. A negative Treynor ratio happens when your portfolio return falls below the risk-free rate. This signals the portfolio underperformed a risk-free asset, even after adjusting for beta.
A: FIRE savers need efficient growth, not just high returns. The Treynor ratio shows whether your portfolio's risk level is actually paying off. A strong ratio means you're reaching your FIRE number without taking on unnecessary risk.