# Tracking Error

*Risk & Portfolio — Finicade finance glossary*

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.

**Related terms:** [Index Fund](https://finicade.com/glossary/index-fund), [Standard Deviation](https://finicade.com/glossary/standard-deviation), [Information Ratio](https://finicade.com/glossary/information-ratio)

Source: https://finicade.com/glossary/tracking-error