Sharpe ratio (sometimes also referred to as information ratio) is widely used in asset management to compare and benchmark funds and asset managers. It computes the ratio of the (excess) net return over the strategy standard deviation. However, the elements to compute the Sharpe ratio, namely,...
measure the risk orvolatility levelassociated with an investment. A high standard deviation means more volatility and less consistency or predictability. The information ratio helps determine how much and how often a portfolio trades over its benchmark but factors in the risk of achieving excess ...
and then calculating the Sharpe ratio using a standard deviation of the total trades. But I don't think this is correct. For the formula to be correct, you would need to first get an average daily standard deviation, and use that in the Sharpe ratio. Another way is to use the following...