Risk-reward ratio

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 ?
Identifying the share of each segment in the pie of the Eid economy is hard, but the risk-reward ratio for brokers with both ends secured is said to be the most lucrative.
"One of the most important aspects why more people are getting interested is because Reits offer an excellent opportunity when it comes to the risk-reward ratio.
The risk-reward ratio for those who will not tender is simply not too favorable,' one stock broker said.
This is why the risk-reward ratio still supports shorting the yen at its current level, even though the currency has already depreciated against the US dollar on speculation that something is stirring.
According to Adam Jepsen, the founder of FinancialSpreads, the UK trading company, this probably makes the risk-reward ratio of trading the UK referendum skewed against investors.
"In spite of sharp increase in risk-reward ratio, the market continues to trade at the upper-end of the trend-line due to a strong expectation of RBI rate cut," said Vinod Nair, Head of Research at Geojit BNP Paribas.
Try to avoid past mistakes or someone will be entitled to say: "I told you so." The risk-reward ratio, especially regarding financial, property or legal concerns, is not in your favour, so be prudent.
Others argue that the risk-reward ratio is high with Mohammad bin Salman; huge potential benefits could come from having a young, dynamic Saudi king who, it's said, wants to move in the modernizing direction of the United Arab Emirates.
But the risk-reward ratio favours conservatism, however outrageously Cook's ultra-adventurous opposite number Brendon McCullum chooses to dangle the carrot.