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Visual deck · 9 scenes · 22 animation beats
The Sharpe ratio, visually
Two funds with the same +12 % and a very different ride. Volatility is the ride, the Sharpe ratio is return per unit of it. The live explainer, the higher-return trap, leverage, how to read a Sharpe, and Sortino in one line.
By Sitraka Forler · Lecturer, Durham Business SchoolUpdated 3 October 2026 About this site
Two funds both made 12 % last year. One did it in a straight line, the other with a 20 % drawdown in March. Most people pick the second one when they only see the annual figure, and the first one when they see the path. The Sharpe ratio is the number that sees the path.
The deck draws both paths, measures the wobble as volatility, and divides. Then it shows the trap the ratio protects you from: a higher return that came from a much higher risk, and leverage that scales both return and volatility, leaving the Sharpe unchanged.
How to drive it
- Click or tap anywhere, or press Space or the right arrow: one press is one animation beat, so you can narrate between reveals.
- Left arrow or right click goes back one beat. Escape leaves the deck.
- The position is kept in the address bar (#scene.beat), so a link lands on the exact beat you were showing.
The 9 scenes
- 1Two funds, same return, different ride
- 2Volatility is the ride: standard deviation of returns
- 3Excess return: subtract what cash paid
- 4The formula: excess return divided by volatility
- 5The live explainer: drag the risk-free rate
- 6The higher-return trap
- 7Leverage scales both, Sharpe stays put
- 8How to read a Sharpe: below 0.5, around 1, above 2
- 9Sortino in one line: only penalise the downside