Information Ratio Calculator
The Information Ratio Calculator measures a portfolio's active return above its benchmark per unit of tracking error. Enter portfolio return, benchmark return, and tracking error.
Formula
Information Ratio = (Portfolio Return − Benchmark Return) ÷ Tracking Error
- Measures consistency of outperformance versus a benchmark.
- Above 0.5 is good and above 1.0 is excellent for active managers.
14% portfolio, 10% benchmark, 5% tracking error
Inputs
- Portfolio Return: 14 %
- Benchmark Return: 10 %
- Tracking Error: 5 %
(14 − 10) ÷ 5 = 0.80 units of active return per unit of tracking error.
Frequently asked questions
What is a good information ratio?
0.4–0.6 is good, and above 1.0 is exceptional, indicating consistent outperformance relative to the benchmark.