Information Ratio Calculator

About this calculator

The information ratio (IR) measures a portfolio manager's skill: IR = (portfolio return − benchmark return) ÷ tracking error, where tracking error is the standard deviation of that excess (active) return over time. It answers a specific question — not just whether a manager beat the benchmark, but how consistently they did so relative to the risk taken to deviate from it.

Institutional investors, fund analysts, and consultants use the information ratio to compare active managers and evaluate mandates, since a high IR signals repeatable skill rather than a lucky bet. It's the active-management cousin of the Sharpe ratio: the Sharpe ratio uses total return over the risk-free rate divided by total volatility, while the information ratio isolates performance relative to a chosen benchmark. Enter the portfolio return, benchmark return, and tracking error to compute it.