The Sharpe and Treynor measures complement each other and thus both should be used to measure portfolio performance.

Question

Quizplus · Accepted Answer

Sharpe and Treynor measures assess different aspects of portfolio performance. Sharpe measures the excess return over the risk-free rate per unit of total risk, while Treynor measures the excess return over the risk-free rate per unit of systematic risk (beta). Therefore, both measures can provide valuable information about a portfolio's performance and should be used in conjunction with each other.

The Sharpe and Treynor Measures Complement Each Other and Thus