STARR Ratio

Evaluation of risk adjusted performance in an alternative to the Sharpe Ratio way, but STARR takes into account the major drawback of the standard deviation as a risk measure, which penalizes not only for upside but for downside potential as well and employs the ETL of the asset returns for the performance adjustment. It is defined as:

STARR Ratio

Investors who are required to select and monitor investment managers should develop a basic understanding of investment statistics. Quantitative tools can provide you with good insight that you can use in your qualitative interviews with managers and when monitoring your investments.