Sterling Ratio

Sterling Ratio

A ratio of the potential return on a hedge fund to a measure of risk. A higher ratio is considered more desirable because it indicates that the hedge fund has a greater return compared to its riskiness. It is calculated thusly:

Sterling ratio = Compounded annual return / (maximum possible loss - 10%)

See also: Calmar ratio, Sharpe ratio, Sortino ratio.
References in periodicals archive ?
This section compares the strengths and weaknesses of using average monthly return, standard deviation, Sharpe ratio, Sterling ratio, MAR ratio, compounded annual return and unit value, and percentage/number of months profitable.