<h1 id="sharpe-ratio">Sharpe Ratio<a aria-hidden="true" class="anchor-heading icon-link" href="#sharpe-ratio"></a></h1>
<h3 id="sharpe-ratio-1">Sharpe Ratio<a aria-hidden="true" class="anchor-heading icon-link" href="#sharpe-ratio-1"></a></h3>
<ul>
<li>helps to understand a stock's performance in relation to the risk it has had</li>
<li>Drawbacks are:
<ol>
<li>uses SD, meaning we are assuming that the returns are normally distributed
<ul>
<li>The stock market is less than a perfect normal distribution, because of a large number of surprising drops and spikes in prices.</li>
</ul>
</li>
</ol>
</li>
<li>the value tells us how much the excess return it has had, in relation to the volatility it has endured (some might call risk).
<ul>
<li>a higher number tells us that the stock did well, considering how risky it was</li>
<li>The volatility considered in terms of ∆Standard Deviation of Excess return (ie. "how much more volatile is this stock than the market?")</li>
</ul>
</li>
<li>Risk premium = how much percentage <em>over</em> the market rate the stock is expected to return (ie. <code>expected return - risk-free rate</code>)</li>
<li>spec: seems to be a backward-looking and limited-use formula</li>
</ul>

Sharpe Ratio

thoughts-on


Welcome to my Second Brain! Here you'll find thoughts, lessons, facts and any other interesting musings that I've come across or thought up over the years. A lot of what I have gathered is originally from the minds of others, while some of it originates from myself. Some notes may contain misinformation, though I try to be rigorous with my additions.

What I have here does not necessarily reflect my thoughts and views. I collect information not based upon whether I agree with it or not, but rather when I determine it to contain some value that can be served in the future.  

You can think of this collection of inter-linked notes as my personal wiki.

This Dendron notebook is the sister vault to the tech-focused [Digital Garden](https://tech.kyletycholiz.com)

## Tags
Throughout the Second Brain, I have made use of tags, which give semantic meaning to the pieces of information.

- `ex.` - Denotes an *example* of the preceding piece of information
- `spec:` - Specifies that the preceding information has some degree of *speculation* to it, and may not be 100% factual. Ideally this gets clarified over time as my understanding develops. I try to go back after I have better understood the topic and clear out the notes of `spec:` tags
- `anal:` - Denotes an *analogy* of the preceding information. When I can, I attempt to link concepts to others that I have previously learned.
- `mn:` - Denotes a *mnemonic* to aid in memorization
- `expl:` - Denotes an *explanation*

## Resources
### UE (Unexamined) Resources
Often, I come across sources of information that I believe to be high-quality. They may be recommendations or found in some other way. No matter their origin, I may be in a position where I don't have the time to fully examine them (and properly extract notes), or I may not require the information at that moment in time. In cases like these, I will add reference to a section of the note called **UE Resources**. The idea is that in the future when I am ready to examine them, I have a list of resources that I can start with. This is an alternative approach to compiling browser bookmarks, which I've found can quickly become untenable.

### E (Examined) Resources
Once a resource has been thoroughly examined and has been mined for notes, it will be moved from *UE Resources* to *E Resources*. This is to indicate that (in my own estimation), there is nothing more to be gained from the resource that is not already in the note.

### Resources
This heading is for inexhaustible resources. 
- A prime example would be a quality website that continually posts articles- another example would be a tool, such as software that measures frequencies in a room to help acoustically treat it.
