How do I measure the performance of a diverse investment portfolio?

Measuring the performance of a diverse investment portfolio involves evaluating the overall returns of the portfolio over a specific time period. The performance of a diverse investment portfolio can be measured using different metrics such as the rate of return, the standard deviation, and the Sharpe ratio.

The rate of return is the percentage increase or decrease in the value of the portfolio over a given period. It reflects the overall profitability of the portfolio.

The standard deviation is a measure of the degree of variation of the returns of the portfolio from the average return. It indicates the level of risk associated with the portfolio.

The Sharpe ratio is a measure of the riskadjusted return of the portfolio. It is calculated by dividing the excess return of the portfolio (i.e., the portfolio's return minus the riskfree rate) by the standard deviation of the portfolio's returns. A higher Sharpe ratio indicates better riskadjusted performance.

Overall, measuring the performance of a diverse investment portfolio involves assessing both the returns and the risks associated with the portfolio.