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What is the WHIS ratio?

WHIS ratio

The WHIS ratio is a measure of risk for an investment portfolio. It relates the active return of the investment, which is the actual return relative to a benchmark, to the adjusted beta, which measures volatility.

Where have you heard about the WHIS ratio?

It's not one of the more well-known risk ratios that have been developed in recent years to try to quantify the risk involved in a random outcome, but it can be useful. It’s named after risk management specialists William Highducheck and Idan Shani.

What you need to know about the WHIS ratio.

Sometimes called the beta-adjusted active return, the WHIS ratio is measured as alpha over beta calculated using the capital asset pricing model, which helps to determine if investments are worth the risk. Beta is adjusted to take into account the predicted future of the portfolio, and used alongside the historical data.

The higher the absolute WHIS ratio, the more likely the portfolio is to avoid risk.

Find out more about the WHIS ratio.

For background information, read our definitions of alpha and beta.

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