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Treynor Ratio Calculator

Measure excess return per unit of market risk, using beta rather than total volatility.

About Treynor Ratio Calculator

The Treynor ratio divides excess return by beta, so it measures reward for systematic market risk only. It is the right measure for a portfolio held as one component of a diversified whole, where specific risk is already diversified away. Treynor and Sharpe can rank portfolios differently, and the gap tells you how much of the risk is specific rather than systematic.

Formula

Treynor Ratio

Treynor Ratio = (portfolio return − risk-free rate) ÷ portfolio beta

excess return
Return earned above what a riskless asset would have paid
Portfolio beta
The risk measure this ratio divides by

Worked example

With the default values below, Treynor Ratio Calculator returns Treynor Ratio of 6.364. Change any input above and every figure here is recalculated in your browser.

Inputs used

Portfolio returnaccepts -100–200 %
11 %
Risk-free rateaccepts 0–30 %
4 %
Portfolio betaminimum 0.01
1.1

Results

Treynor Ratio
6.364
Excess Return Over Risk-Free
7.00%
Interpretation
Good — good return per unit of market risk
Return per Unit of Risk
10.000
Risk Level That Would Halve the Ratio
2.20

Step by step

  1. 1Values used
  2. 2Treynor Ratio
  3. 3Treynor Ratio= 6.364
  4. 4Excess Return Over Risk-Free= 7.00
  5. 5Interpretation= Good — good return per unit of market risk
  6. 6Return per Unit of Risk= 10.000
  7. 7Risk Level That Would Halve the Ratio= 2.20

Assumptions and limits

  • The result is derived only from the 3 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 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • 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.

Frequently Asked Questions

How is Treynor Ratio calculated?

Treynor Ratio = (portfolio return − risk-free rate) ÷ portfolio beta The Treynor ratio divides excess return by beta, so it measures reward for systematic market risk only. It is the right measure for a portfolio held as one component of a diversified whole, where specific risk is already diversified away.

Why does Treynor Ratio matter?

Treynor and Sharpe can rank portfolios differently, and the gap tells you how much of the risk is specific rather than systematic.

What values do I need to enter?

This calculator takes 3 inputs: Portfolio return, Risk-free rate, Portfolio beta. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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