Information Ratio Calculator

Written by Great Medico

Updated September 25, 2026 •2 min read

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Investment math often looks simple until time, compounding, cash flows, and percentages start interacting. Information Ratio Calculator keeps those moving parts in one focused calculation.

What this calculator does

Information Ratio Calculator calculates portfolio excess return over the benchmark and divides it by tracking error to produce an information ratio. The result is deliberately tied to the fields on this page, so it represents this calculator’s model rather than a broader financial analysis with unentered assumptions.

How to use it

Enter Currency, Beginning portfolio value, Ending portfolio value, Benchmark return, and Tracking error. Keep percentage assumptions in the units shown on the form and make sure the time unit of rates matches the term or period count. The currency selector changes display currency only; it does not perform an exchange-rate conversion. Before using the result in a decision, recheck unusually large or negative values against the source data rather than assuming the calculator is correcting an inconsistent input.

How the calculation works

Portfolio return is calculated from beginning and ending portfolio value. Excess return = portfolio return − benchmark return, and information ratio = excess return ÷ tracking error. Tracking error must be positive.

Example

The default portfolio rises 10% versus an 8% benchmark return, creating 2% excess return. Dividing by 5% tracking error gives an information ratio of 0.4.

How to interpret the result

Interpret the result as a modeled finance quantity, not a forecast or recommendation. Returns, rates, correlations, cash flows, fees, taxes, and market prices can change, so the most useful practice is to test a range of plausible inputs rather than treating one scenario as certain.

Limitations and notes

The model assumes the inputs remain constant for the calculation. It does not automatically include taxes, inflation, transaction costs, liquidity constraints, changing rates, or sequence-of-returns risk unless those items appear as fields. Past or assumed returns are not guarantees of future results, and the output is not individualized investment advice.