Risk-Adjusted Return

Risk-adjusted return is a measure that compares the profit of an investment to the amount of risk taken to achieve that profit. It helps investors understand how much return they're receiving for the level of risk they assume. A higher risk-adjusted return suggests an investment is yielding good profits for its level of risk, while a lower one may indicate that the returns aren't worth the risk taken. This concept allows investors to evaluate and compare different investments more effectively, considering both potential rewards and associated risks.