Sharpe Ratio
Definition
A measure of risk-adjusted return, calculated as the excess return per unit of volatility. Higher values indicate better risk-adjusted performance.
Example
A Sharpe ratio of 2.0 means the strategy earned 2 units of return for every 1 unit of risk taken. Generally, above 1.0 is good, above 2.0 is very good.
How Gilito AI Uses It
Sharpe ratio is a key component of the Gilito Score and is displayed for every strategy. It helps compare strategies that might have similar returns but different risk profiles.