Information Ratio
5paisa Research Team
Last Updated: 02 Jan, 2025 12:38 PM IST

Content
- What is Information Ratio?
- Uses of the Information Ratio
- The formula for Calculating the Information Ratio
- Example of Information Ratio
- How is Information Ratio Useful?
- Information Ratio vs Sharpe Ratio
- What are the Limitations of IR?
- What’s the Difference between the Information and Sharpe Ratio?
The Information Ratio (IR) stands out as a critical metric for assessing investment portfolios' performance in the complex world of financial markets. Designed to measure the excess returns generated by a portfolio relative to a benchmark index, IR helps investors and fund managers make informed decisions. In this article, we take a look into the concept of the Information Ratio, its uses, and the vital role it plays in financial decision-making.
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