Enter period returns, target return, and risk-free rate, then click Calculate.

The Sortino ratio is a performance metric that measures the risk-adjusted return of an investment, focusing only on downside risk (negative returns). Unlike the Sharpe ratio, which penalizes both upside and downside volatility, the Sortino ratio distinguishes harmful volatility from beneficial volatility. It is calculated as: Sortino Ratio = (R_p - R_f) / σ_d, where R_p is the average periodic return, R_f is the risk-free rate, and σ_d is the downside deviation (standard deviation of negative returns below a target threshold). The target return is typically the minimum acceptable return, often set to 0% or the risk-free rate. A higher Sortino ratio indicates better risk-adjusted performance relative to downside risk. This metric is particularly valuable for evaluating investments with asymmetrical risk profiles, such as hedge funds, private equity, and options strategies, where investors are more concerned about downside losses than upside volatility.

1. Enter the Period Returns as comma-separated values (e.g., 5, -2, 8, -5).
2. Enter the Target Return – the minimum acceptable return (usually 0% or risk-free rate).
3. Enter the Risk-Free Rate – the return of a risk-free asset (e.g., government bonds).
4. Click Calculate Sortino Ratio to compute the result.
5. The result shows average return, downside deviation, Sortino ratio, and interpretation.
6. Click Reset to restore default example values.