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Information Ratio Calculator

Calculate Portfolio Return and Information Ratio from beginning & ending values, benchmark return, and tracking error.

Information Ratio Calculator

In the world of investing, it’s not enough to just look at raw returns. A high return may come with equally high risks, while a modest return could be more consistent and reliable. This is where the Information Ratio (IR) comes in — a powerful metric that helps investors measure risk-adjusted returns compared to a benchmark.

Our Information Ratio Calculator is designed to make this calculation quick, simple, and precise. By entering your beginning portfolio value, ending portfolio value, benchmark return, and tracking error, you can instantly compute both your Portfolio Return and the Information Ratio.

What is the Information Ratio?

The Information Ratio (IR) evaluates how well a portfolio or investment strategy outperforms a benchmark, adjusted for the amount of risk taken.

IR = (Rp − Rb) ÷ TE

(Rp): Portfolio Return (%)
(Rb): Benchmark Return (%)
(TE): Tracking Error (%)
👉 In simple terms: A higher Information Ratio means better risk-adjusted performance. 👉 A low or negative Information Ratio suggests poor or inconsistent returns relative to risk.

Why Use the Information Ratio Calculator?

Instant Results – No manual calculations or spreadsheets required.
Accurate & Reliable – Based on the industry-standard formula.
User-Friendly – Clean and intuitive interface.
Time-Saving – Get results in just seconds.
Free to Use – Available anytime, anywhere, with no sign-ups.

Example Calculations

Example 1

Beginning Value = $25,000

Ending Value = $345,000

Benchmark Return = 7.8%

Tracking Error = 2%

Step 1: Portfolio Return Rp = (345,000 − 25,000) ÷ 25,000 × 100 = 1,280%

Step 2: IR = (1280 − 7.8) ÷ 2 = 1272.2 ÷ 2 = 636.1

✅ Portfolio Return = 1,280%, Information Ratio = 636.1

Example 2

Beginning Value = $100,000

Ending Value = $135,000

Benchmark Return = 8%

Tracking Error = 4%

Step 1: Portfolio Return Rp = (135,000 − 100,000) ÷ 100,000 × 100 = 35%

Step 2: IR = (35 − 8) ÷ 4 = 27 ÷ 4 = 6.75

✅ Portfolio Return = 35%, Information Ratio = 6.75

Example 3

Beginning Value = $50,000

Ending Value = $55,000

Benchmark Return = 12%

Tracking Error = 3%

Step 1: Portfolio Return Rp = (55,000 − 50,000) ÷ 50,000 × 100 = 10%

Step 2: IR = (10 − 12) ÷ 3 = −2 ÷ 3 = −0.67

✅ Portfolio Return = 10%, Information Ratio = −0.67

Who Should Use This Calculator?

Portfolio Managers – Assess performance against benchmarks.
Investors & Traders – Evaluate risk-adjusted profitability.
Financial Analysts – Compare multiple strategies.
Educators & Students – Learn advanced performance measurement.
Wealth Advisors – Demonstrate value-added returns to clients.

Why This Calculator Matters

Unlike raw returns, the Information Ratio highlights consistency. Two portfolios may both achieve 12% returns, but the one with less risk and higher IR is the better investment. That’s why professional investors rely on IR to make informed decisions. Our Information Ratio Calculator eliminates the need for manual trial-and-error and ensures you get instant, accurate, and insightful results.

Real-World Applications

Mutual Funds & ETFs – Measure fund managers’ consistency.
Hedge Funds – Compare strategies with varying risks.
Institutional Investors – Assess portfolio managers’ value-add.
Retail Investors – Evaluate whether active investing beats passive benchmarks.

✅ Whether you are a professional investor, student, or casual learner, the Information Ratio Calculator is a must-have tool for analyzing performance beyond just numbers. Try it now on Hive Calculator and make smarter, risk-adjusted investment decisions.