# Sharpe Ratio

*Risk & Portfolio — Finicade finance glossary*

Return earned per unit of risk taken: an investment's excess return over cash, divided by its volatility. It lets you compare a calm strategy and a wild one on equal footing — higher is better.

**Related terms:** [Volatility](https://finicade.com/glossary/volatility), [Risk Premium](https://finicade.com/glossary/risk-premium), [Portfolio](https://finicade.com/glossary/portfolio)

**Taught in:** Charter Climb — CAPM & the Efficient Frontier

Source: https://finicade.com/glossary/sharpe-ratio