Information Ratio Calculator
Active return per unit of tracking error — the metric that judges whether a manager's benchmark deviation earns its risk.
Formula
IR is the Sharpe ratio of active management — it asks whether straying from the benchmark paid off per unit of straying. An IR above 0.5 is genuinely good and rare; Grinold's fundamental law says IR = skill × √breadth, so consistency across many bets beats one lucky call.
Not financial advice — for informational and analytical use only. Verify all figures with a qualified professional before acting on them.
Need information ratio calculator results fast? Analysts, founders, traders and finance professionals use the Information Ratio Calculator to skip the spreadsheet and get a defensible answer in one step — free, private and instant.
About Information Ratio Calculator
Active return per unit of tracking error — the metric that judges whether a manager's benchmark deviation earns its risk. IR is the Sharpe ratio of active management — it asks whether straying from the benchmark paid off per unit of straying. An IR above 0.5 is genuinely good and rare; Grinold's fundamental law says IR = skill × √breadth, so consistency across many bets beats one lucky call. The governing relationship is IR = (R_p − R_b) / tracking error. The Information Ratio Calculator computes entirely in your browser — free, private (your figures never leave your device) and instant, recalculating live as you change any input.
How to use Information Ratio Calculator
- 1Enter Portfolio return (%), Benchmark return (%), Tracking error (%) into the Information Ratio Calculator.
- 2The result is computed automatically using IR = (R_p − R_b) / tracking error — there is no button to press.
- 3Change any input to model a different scenario, then copy or share the result.
Why use Information Ratio Calculator?
- ✓Computes information ratio calculator instantly with the correct formula — no spreadsheet needed
- ✓100% free and unlimited, with no sign-up, login or paywall
- ✓Runs entirely in your browser, so the figures you enter stay private
- ✓Shows the formula, a live worked example and references so you can defend the number
Frequently asked questions
What is the formula behind the Information Ratio Calculator?+
Information Ratio Calculator uses IR = (R_p − R_b) / tracking error. IR is the Sharpe ratio of active management — it asks whether straying from the benchmark paid off per unit of straying. The tool substitutes your actual inputs into this relationship and shows the worked example step by step.
What inputs does the Information Ratio Calculator need?+
Enter Portfolio return (%), Benchmark return (%), Tracking error (%) and the result updates immediately — there is no button to press. Change any value to model a different scenario in real time.
Is the Information Ratio Calculator free, and is my data private?+
Yes — it is completely free with no sign-up or usage limit, and it runs entirely in your browser, so the numbers you enter are never uploaded or stored on any server. It is for informational and analytical use, not financial advice.
What should I watch out for when using the Information Ratio Calculator?+
An IR above 0.5 is genuinely good and rare; Grinold's fundamental law says IR = skill × √breadth, so consistency across many bets beats one lucky call.
What is the Information Ratio Calculator based on?+
The method follows authoritative sources: Grinold & Kahn — Active Portfolio Management. The formula and references are shown on the page so you can verify and cite the result.
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