Information Ratio

 

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Information Ratio

The ratio of annualized expected residual return to residual risk. A central measurement for active management, value added is proportional to the square of the information ratio.



Information Ratio

Similar Matches

Fundamental Information

Fundamental Information

Information relating to the economic state of a company or economy. In market analysis, fundamental information is related to the earnings prospects of the firm only.


Asymmetric information

Asymmetric information

The failure of two parties to a transaction to have the same relevant information. Examples are buyers who know less about product quality than sellers, and lenders who know less about likely default than borrowers. Both are common in international markets.


Expected value of perfect information

Expected value of perfect information

The expected value if the future uncertain outcomes could be known minus the expected value with no additional information.


Price sensitive information

Price sensitive information

Information which, if made public, is likely to have a significant effect on the price of a company's securities. Such information must, in connection with a listed company, be reported to RNS, so that it can be released to the market in a fashion which is fair to all investors.Any person who uses price sensitive information to make a profit either for themselves or a third party in the shares of a company are in breach of insider trading laws or the Market Abuse Regime.


Information Coefficient (IC)

Information Coefficient (IC)

The correlation between predicted and actual stock returns, sometimes used to measure the contribution of a financial analyst. An IC of 1.0 indicates a perfect linear relationship between predicted and actual returns, while an IC of 0.0 indicates no linear relationship.


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