Risk-reward ratio

(redirected from Risk-Reward Ratios)

Risk-reward ratio

Relationship of substantial reward corresponding to the amount of risk taken; mathematically represented by dividing the expected return by the standard deviation.

Risk-Reward Ratio

The ratio of the standard deviation of an investment to its expected return. The higher the ratio is, the lower the return for the amount of risk one is taking. This can inform one's investment decisions. See also: Risk adjusted return on capital.
References in periodicals archive ?
The economic and environmental risk-reward ratios are moving targets.
On more than one occasion in the last couple of months the Blues boss has noted how diffi-cult his team find playing two matches in a week and he is torn between the risk-reward ratios of retaining continuity or introducing fresh legs.
What an active manager is able to do is adjust the way the portfolio is managed relative to duration, to pick spots on the yield curve that offer the best risk-reward ratios, and also to evaluate sector and issue selection.
In an uncertain market, the report states, investors are not looking to add risk to their portfolios, and high risk-reward ratios are junior mining's "sweet spot.