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Information Ratio Calculator

Work out information ratio instantly with clear inputs, formula shown and shareable results.

About Information Ratio Calculator

The information ratio is active return per unit of tracking error — the efficiency of a manager's deviations from the benchmark. Multiplying it by the square root of the number of years gives a t-statistic, showing how much data is needed before the result means anything.

Formula

Information ratio

IR = (R_p - R_b) / tracking error; t = IR × √years

Worked example

With the default values below, Information Ratio Calculator returns Information Ratio of 0.6000. Change any input above and every figure here is recalculated in your browser.

Inputs used

Portfolio Returnaccepts 0–100 %
15.5 %
Benchmark Returnaccepts 0–100 %
12.8 %
Tracking Erroraccepts 0.1–40 %
4.5 %
Years Of Dataaccepts 1–40
5

Results

Information Ratio
0.6000
Active Return
2.700%
T-Statistic Of The Active Return
1.342
Statistical Assessment
Too little evidence to separate skill from luck

Step by step

  1. 1Values used
  2. 2Information ratio
  3. 3Information Ratio= 0.6000
  4. 4Active Return= 2.700
  5. 5T-Statistic Of The Active Return= 1.342
  6. 6Statistical Assessment= Too little evidence to separate skill from luck

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.

Frequently Asked Questions

What information ratio is good?

Around 0.5 is respectable and above 1.0 is exceptional and rare over long periods.

Why does the t-statistic matter?

An IR of 0.5 needs about 16 years of data to reach statistical significance, which is longer than most track records.

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