The Information Ratio is a ratio of relative return to relative risk taken, compared to a benchmark.
What does the chart show?
Measures the excess returns in terms of each unit of relative risk taken, compared to a benchmark.
How to interpret the chart
In comparing Information Ratios, a higher number is preferred. The higher the Information Ratio, the greater the excess return, given the relative risk involved.
When to use the chart
This chart is more useful for benchmark-aware strategies, and can be used to assess the risk-return efficiency relative to the benchmark.