Sterling Ratio Calculator

✖Compound Annual Growth Rate is a measure of the geometric progression ratio that provides a constant rate of return over a specified time period.ⓘ Compound Annual Growth Rate [CAGR]			+10% -10%
✖Average Maximum Drawdown represents the greatest potential loss or downturn over the defined period.ⓘ Average Maximum Drawdown [AMDD]			+10% -10%

✖Sterling Ratio is a measure of the risk-adjusted return of an investment portfolio.ⓘ Sterling Ratio [SR]

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Formula

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Sterling Ratio

Formula

`"SR" = ("CAGR"/("AMDD"-10))*-1`

Example

`"10"=("150"/("-5"-10))*-1`

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Sterling Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Sterling Ratio = (Compound Annual Growth Rate/(Average Maximum Drawdown-10))*-1
SR = (CAGR/(AMDD-10))*-1
This formula uses 3 Variables

Variables Used

Sterling Ratio - Sterling Ratio is a measure of the risk-adjusted return of an investment portfolio.
Compound Annual Growth Rate - Compound Annual Growth Rate is a measure of the geometric progression ratio that provides a constant rate of return over a specified time period.
Average Maximum Drawdown - Average Maximum Drawdown represents the greatest potential loss or downturn over the defined period.

STEP 1: Convert Input(s) to Base Unit

Compound Annual Growth Rate: 150 --> No Conversion Required
Average Maximum Drawdown: -5 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

SR = (CAGR/(AMDD-10))*-1 --> (150/((-5)-10))*-1

Evaluating ... ...

SR = 10

STEP 3: Convert Result to Output's Unit

10 --> No Conversion Required

FINAL ANSWER

10 <-- Sterling Ratio

(Calculation completed in 00.004 seconds)

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Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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Modigliani-Modigliani Measure

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Sterling Ratio

Go Sterling Ratio = (Compound Annual Growth Rate/(Average Maximum Drawdown-10))*-1

Risk Tolerance

Go Risk Tolerance = (Public Equity Exposure*0.35)/Monthly Gross Income

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Go Basis Risk = Future Price of Contract-Spot Price of Hedged Asset

Credit Value at Risk

Go Credit Value at Risk = Worst Credit Loss-Expected Credit Loss

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Go Economic Capital = Earnings at Risk/Required Rate of Return

Calmar Ratio

Go Calmar Ratio = (Average Rate of Return/Maximum Drawdown)*-1

Upside/Downside Ratio

Go Upside/Downside Ratio = Advancing Issues/Declining Issues

Credit Spread

Go Credit Spread = Corporate Bond Yield-Treasury Bond Yield

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Go Probability of Default = 1/(1+exp(-Linear Combination))

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Go Default Risk Premium = Interest Rate-Risk Free Rate

Pain Ratio

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Loss Given Default

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Sterling Ratio Formula

Sterling Ratio = (Compound Annual Growth Rate/(Average Maximum Drawdown-10))*-1
SR = (CAGR/(AMDD-10))*-1

What is Sterling Ratio?

The Sterling ratio quantifies investment performance by comparing periodic returns to periodic drawdowns. The unique aspect of this ratio is that it defines risk as being a direct representation of an investment's average maximum drawdown.The Sterling ratio is useful in this area as it gives analysts a quick and easy method of determining if the assumed risk involved with an investment is justified. In the event that it is not, strategic considerations may be needed to properly align risk and reward.

How to Calculate Sterling Ratio?

Sterling Ratio calculator uses Sterling Ratio = (Compound Annual Growth Rate/(Average Maximum Drawdown-10))*-1 to calculate the Sterling Ratio, The Sterling Ratio quantifies investment performance by comparing periodic returns to periodic drawdowns over 3 years. Sterling Ratio is denoted by SR symbol.

How to calculate Sterling Ratio using this online calculator? To use this online calculator for Sterling Ratio, enter Compound Annual Growth Rate (CAGR) & Average Maximum Drawdown (AMDD) and hit the calculate button. Here is how the Sterling Ratio calculation can be explained with given input values -> 10 = (150/((-5)-10))*-1.

FAQ

What is Sterling Ratio?

The Sterling Ratio quantifies investment performance by comparing periodic returns to periodic drawdowns over 3 years and is represented as SR = (CAGR/(AMDD-10))*-1 or Sterling Ratio = (Compound Annual Growth Rate/(Average Maximum Drawdown-10))*-1. Compound Annual Growth Rate is a measure of the geometric progression ratio that provides a constant rate of return over a specified time period & Average Maximum Drawdown represents the greatest potential loss or downturn over the defined period.

How to calculate Sterling Ratio?

The Sterling Ratio quantifies investment performance by comparing periodic returns to periodic drawdowns over 3 years is calculated using Sterling Ratio = (Compound Annual Growth Rate/(Average Maximum Drawdown-10))*-1. To calculate Sterling Ratio, you need Compound Annual Growth Rate (CAGR) & Average Maximum Drawdown (AMDD). With our tool, you need to enter the respective value for Compound Annual Growth Rate & Average Maximum Drawdown and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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