Risk-adjusted return

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Risk-adjusted return

Often we subtract from the rate of return on an asset a rate of return from another asset that has similar risk. This gives an abnormal rate of return that shows how the asset performed over and above a benchmark asset with the same risk. We can also use the beta of the asset multiplied by the benchmark return to create a hypothetical asset that has the same risk characteristics. The difference between the asset return and the beta times the benchmark is the risk adjusted return and is also known as the alpha.

Risk-Adjusted Return

The return on an asset or investment relative to the return on assets and investments with similar risk. The risk-adjusted return can help an investor determine whether he/she is extracting the highest possible return for the least possible risk. One way to calculate the risk-adjusted return is to take the Sharpe ratio.
References in periodicals archive ?
Enforcing risk limits that are not modified by return expectations could lead to sub-optimal performance as the company rejects risks that exceed absolute limits even though they are priced to provide adequate risk-adjusted returns.
The truly irreplaceable location of the 1880 Broadway Retail Condominium, strong sponsorship and exceptional risk-adjusted returns made this a highly sought after investment in both the debt and equity markets," adds Steve Kohn, president of Sonnenblick-Goldman.
The award highlights the outstanding risk-adjusted returns delivered by the TCW Total Return Bond Fund (NASDAQ:TGLMX) since its inception in 1993.
HRC's objective is to create and manage a diversified portfolio of loans and real estate, with a long-range goal of generating high, risk-adjusted returns for its investors.
They can be based on income levels, operating returns, risk-adjusted returns or shareholder value.
By combining alternative, historically lower-correlated vehicles, the Yield Hog offers the potential for high risk-adjusted returns over time.
CABR is a proven partner for AEW and we intend to capitalize on their extensive market knowledge, sourcing and management capabilities in order to achieve high risk-adjusted returns for our clients," said Marc Davidson, portfolio manager for the AEW Partners Funds, a series of opportunistic real estate funds managed by AEW.
KPP's two predecessor funds - Regis Capital Partners, LP and KPP Investors II LP - have made over 36 investments, deploying nearly $500 million and achieving superior risk-adjusted returns.
s strategy is to generate a diversified portfolio of commercial real estate investments, and to leverage these investments to produce attractive risk-adjusted returns.
mid caps delivered superior absolute and risk-adjusted returns compared to stocks in other market capitalization ranges," Dunkerley said.
The fund's objective is to create and manage a diversified portfolio of loans and real estate, with a long-range goal of generating high, risk-adjusted returns for its investors.
All Cap Value service has consistently provided superior risk-adjusted returns using an investment strategy that minimizes volatility and risks and identifies investment opportunities in the market based on companies' intelligent use of free cash flow," said Mr.

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