Measure active return per unit of tracking error.
Please do not make financial decisions based on these results.
What is the Information Ratio Calculator?
Measure active return per unit of tracking error. To use the Information Ratio Calculator, enter portfolio return, benchmark return, tracking error; it returns information ratio, active return, and shows them instantly as you type.
Where the Information Ratio Calculator fits
Measure active return per unit of tracking error. The main figure it returns is the Information ratio, worked out from the values you enter.
It belongs with the other investment tools. If you are comparing options or checking a result from another angle, try the Sharpe Ratio Calculator, Sortino Ratio Calculator or the Treynor Ratio Calculator.
How to use the Information Ratio Calculator
- Enter your numbers. The inputs are Portfolio return (%), Benchmark return (%), Tracking error (%). Use a rate of return you consider realistic; small changes compound into large differences. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Information ratio, and the cards below show Active return. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Information Ratio Calculator using the default values shown in the calculator above:
Inputs
| Portfolio return (%) | 11 |
|---|---|
| Benchmark return (%) | 9 |
| Tracking error (%) | 3.5 |
Results
| Information ratio | 0.57 |
|---|---|
| Active return | 2% |
With these inputs the calculator returns Information ratio: 0.57. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Portfolio return (%) from 11 to 13.2 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Information ratio | 0.57 | 1.2 | +110% |
| Active return | 2% | 4.2% | +110% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Information Ratio Calculator reports Information ratio and active return. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. Investment returns are not guaranteed. The result shows what the numbers you enter would produce, not what the market will do. It is for information, not financial, tax or legal advice.
Frequently asked questions
What is a good information ratio?
Above 0.5 is often seen as good and above 1.0 as exceptional.
Are investment returns guaranteed?
No. Real returns vary. Use these tools to compare scenarios, not to predict results.
What rate of return should I assume?
There is no guaranteed rate. Test a range of conservative and optimistic rates, and remember that fees and inflation reduce your real return.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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