Arcade › Glossary › Risk & Portfolio › Tracking Error Risk & Portfolio Tracking Error How far a portfolio's returns stray from its benchmark, measured as the standard deviation of the difference. Low for index funds by design; high for active bets that live or die on being different. Want more than a definition? Learn it in Charter Climb → Related terms Index Fund Standard Deviation Information Ratio ← Previous Three Lines of Defense Next → Treynor Ratio ← All Risk & Portfolio terms