---
title: "Sharpe Ratio Calculator: Volatility from Returns | RupeeCase"
description: "Sharpe ratio calculator: paste monthly returns and get annualised volatility, compound return, Sharpe ratio, maximum drawdown and the best and worst month."
source_url: "https://www.rupeecase.com/learn/tools/sharpe-volatility-calculator"
---

Sharpe ratio**0.46**
Volatility, annualised**7.35%**
Return, annualised (compound)**10.02%**
Maximum drawdown**−3.90%**
Best month**4.1%**
Worst month**−3.9%**
Months in the series**24**

* Growth of 100

Sharpe = (mean monthly return x 12 - risk free) / (standard deviation of monthly returns x the square root of 12).
      Share this resultReset

  01How it works

## In plain words.
Volatility is the standard deviation of the monthly returns, scaled to a year by the square root of 12. The Sharpe ratio is the yearly excess return over the risk free rate, divided by that volatility: return per unit of risk.

    The formula

`Volatility = stdev(monthly returns) x sqrt(12)``Sharpe = (mean monthly return x 12 - risk free) / volatility``Compound return = (product of (1 + r))^(12 / months) - 1`

  02Worked example

## The default numbers, by hand.
The 24 month sample: mean 0.82% a month (9.85% a year), standard deviation 2.12%, so volatility 2.12% x 3.464 = 7.35% and Sharpe (9.85% - 6.5%) / 7.35% = 0.46.

| Input | Value |
| --- | --- |
| Monthly returns, % (sample series) | 24 values (the default sample) |
| Risk free rate a year | 6.5% |

| Result | Value |
| --- | --- |
| Sharpe ratio | 0.46 |
| Volatility, annualised | 7.35% |
| Return, annualised (compound) | 10.02% |
| Maximum drawdown | −3.90% |
| Best month | 4.1% |
| Worst month | −3.9% |
| Months in the series | 24 |

  03Key concepts

## What to know before you use it.

### What Sharpe tells you
How much return a strategy earned for each unit of volatility. Above 1 is strong for an equity strategy over a long period; short samples can mislead.

### What it misses
Volatility treats rises and falls alike and assumes a bell curve. The maximum drawdown card shows the fall that volatility can understate.

### Good to know

* Use the yield of a 91 day T-bill or a similar rate as the risk free rate, stated with its date.
* Compare Sharpe ratios only over the same dates.

  04Assumptions

## What the calculator assumes.

* Monthly returns, in percent; the arithmetic mean for Sharpe, the compound mean for the return.
* Sample standard deviation (n - 1).

  05Questions

## Asked about the Sharpe and volatility.
How do you calculate the Sharpe ratio?Subtract the risk free rate from the annualised return and divide by the annualised volatility. From monthly data: (mean x 12 - risk free) / (stdev x sqrt(12)).

How do you annualise monthly volatility?Multiply the monthly standard deviation by the square root of 12.

    Explore next

## Learn the idea behind the numbers.

* [Blog noteThe risk you get paid forPortfolio construction, a short note](/blog/2026-07-05-evening-risk-you-get-paid-for/)
* [Blog noteMidcap Smallcap: breadth is not diversificationStrategy notes, a short note](/blog/2026-06-30-evening-midcap-smallcap-breadth/)
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06Keep going

## Learn the idea, see it applied.

  [Module 2.3Risk Metrics That Matter8 min read, Path 02](/learn/path-2/module-2-3-risk-metrics-that-matter)[Module 4.4Performance Measurement9 min read, Path 04](/learn/path-4/module-4-4-performance-measurement)[Module 5.1Statistical Foundations for Quant Investing9 min read, Path 05](/learn/path-5/module-5-1-statistical-foundations)[The matching indexAllcap Multi Asset50 stocks, 10% debt, 10% gold. The broad-market engine with a cushion.CAGR40.5%Sharpe1.81Max DD−21.3%Model, back tested, as of 27 Apr 2026. Not client returns, not a promise. Risk band: Moderate.](/strategies/allcap-multi-asset)

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  Education only, not investment advice. RupeeCase is a technology platform operated by QC Alpha Technologies Pvt Ltd; it is not a fund, a PMS or a SEBI registered investment adviser. Model returns are back tested and not a promise of future returns. Figures carry the date they were checked.