Treynor Ratio Calculator
Results are estimates based on the values you enter. Recheck your inputs and assumptions before using the output for decisions.
Calculate Treynor ratio from portfolio return, risk-free rate, beta, and portfolio value.
Treynor Ratio Calculator
Free online Treynor ratio calculator to measure risk-adjusted return using beta, which reflects systematic market risk rather than total volatility. This calculator is useful for investors, portfolio managers, finance students, analysts, and anyone evaluating portfolio performance in relation to market risk. Treynor ratio is especially useful when comparing diversified portfolios because it focuses on the return earned above the risk-free rate for each unit of beta risk. A higher Treynor ratio usually suggests a more attractive reward for the market risk taken.
This calculator uses four main inputs. Portfolio value means the amount currently invested. Portfolio return means the return earned by the portfolio over the period. Risk-free rate means the return available from a very low-risk investment over the same period. Portfolio beta means the portfolio’s sensitivity to market movements. Once those values are entered, the calculator shows Treynor ratio, excess return, portfolio ending value, and risk-free ending value. These outputs help you compare actual portfolio performance with a low-risk benchmark while focusing on systematic risk exposure.
The formula of Treynor ratio
Excess return = Portfolio return – Risk-free rate
Treynor ratio = Excess return / Beta
Portfolio ending value = Portfolio value x (1 + Portfolio return)
Risk-free ending value = Portfolio value x (1 + Risk-free rate)
Here portfolio return means the actual return earned, risk-free rate means the low-risk benchmark return, excess return means the return earned above the risk-free rate, beta means the portfolio’s systematic risk relative to the market, Treynor ratio means excess return per unit of beta risk, portfolio ending value means the ending value after the portfolio return, and risk-free ending value means the ending value if the same money had earned the risk-free rate instead.
Solved Example
Example 1: Find the Treynor ratio if portfolio value is $100,000, portfolio return is 12%, risk-free rate is 4%, and beta is 1.20.
Solve: Excess return = 12% – 4% = 8%
Treynor ratio = 8% / 1.20 = 0.0667
Portfolio ending value = 100000 x 1.12 = $112,000
Risk-free ending value = 100000 x 1.04 = $104,000
Example 2: Find the result if portfolio value is $80,000, portfolio return is 10%, risk-free rate is 3%, and beta is 0.80.
Solve: Excess return = 10% – 3% = 7%
Treynor ratio = 7% / 0.80 = 0.0875
Portfolio ending value = $88,000
Risk-free ending value = $82,400
Example 3: Find the result if portfolio value is $60,000, portfolio return is 7%, risk-free rate is 4%, and beta is 1.50.
Solve: Excess return = 7% – 4% = 3%
Treynor ratio = 3% / 1.50 = 0.0200
Portfolio ending value = $64,200
Risk-free ending value = $62,400
Table of Treynor ratio calculator
| Portfolio Return | Risk-free Rate | Beta | Treynor Ratio |
|---|---|---|---|
| 7% | 4% | 1.50 | 0.0200 |
| 10% | 3% | 0.80 | 0.0875 |
| 12% | 4% | 1.20 | 0.0667 |
| 15% | 5% | 1.00 | 0.1000 |
How to use this Treynor ratio calculator
Enter the portfolio value in the proper input field. After that, enter portfolio return, risk-free rate, and portfolio beta as percentage and beta values. Then click the calculate button. The calculator will show Treynor ratio, excess return, portfolio ending value, and risk-free ending value in the result box.
This calculator is especially useful when comparing diversified portfolios where unsystematic risk has largely been diversified away. In that setting, beta becomes more relevant than total volatility because it measures the portion of risk tied to overall market movements. Treynor ratio helps show whether the portfolio earned enough extra return for the level of market exposure it carried.
When using the result, remember that Treynor ratio depends on the beta estimate and the period used for returns. Beta itself can change over time, and different estimation windows can produce different results. Even so, Treynor ratio remains one of the clearest ways to compare excess return against systematic risk. This calculator gives a fast way to connect return, risk-free performance, and beta into one practical metric for investment analysis.