Sharpe ratio of a portfolio
What it shows
The Sharpe ratio (annualized) plus your portfolio's path compared with BTC and ETH, normalized to a common start = 100. It measures historical return per unit of volatility, meaning how much "stress" a given return cost.
How to read it
Sharpe condenses the return/risk relationship into one number, and the chart shows it visually against the two simplest alternatives: BTC alone and ETH alone. If the portfolio line sits below them, the extra coins did not improve return/risk in this window. More positions is not necessarily better. Changing the day range can flip the picture. Historical data, not a forecast.
Parameters
- Sharpe (annualized)
- Average daily return ÷ its standard deviation, scaled to a year (×√365).
- Positive reading: Clearly above ~1: the return amply compensated for volatility.
- Negative reading: Negative: historically the risk was not rewarded.
- Neutral reading: 0–1: the return covered the risk modestly.
- Benchmark (lines from 100)
- Portfolio vs BTC vs ETH: all start at 100, so you see who grew more in percentage terms.
- Positive reading: The portfolio line stays above BTC and ETH, which means it did better in this window.
- Negative reading: Below both lines: simply holding BTC/ETH would have done better.
- Neutral reading: Between BTC and ETH: an in-between result.