Investment Metrics
How to tell a great investment from a lucky one.
The numbers investors actually live by — ROI, CAGR, volatility, drawdown, Sharpe, Sortino, alpha, and beta — explained in plain language with worked examples.
Anyone can show you a chart that goes up. The hard part is telling a great investment from a lucky one — how fast it grew, how wild the ride was, and whether the manager added skill or just rode the market up. Investment metrics are the small toolkit that turns a squiggly price chart into numbers you can compare, rank, and trust.
You’ll build the toolkit from the ground up:
- Return (ROI & CAGR) — how much you made, and how fast it actually compounded.
- Volatility — how much you sweated; the size of the swings along the way.
- Max drawdown — the worst peak-to-trough fall, the metric that tests your stomach.
- Sharpe & Sortino — risk-adjusted return, because a 60% gain on a calm ride beats the same 60% on a near-heart-attack.
- Alpha & beta — skill vs. just-riding-the-market, separating the manager’s edge from market drift.
Master these and a price chart stops being a story and becomes evidence — a real rung up the finance ladder from “it went up” to “here’s exactly how good it was.”
In this topic
- 1 Measuring Returns: ROI and CAGR How fast did your money actually grow? Learn ROI (total gain) and CAGR (the compounding-aware annual rate) with worked examples and an interactive growth chart. 8 min
- 2 Measuring Risk: Volatility and Max Drawdown Return is only half the story. Learn volatility (the standard deviation of returns) and maximum drawdown (the worst peak-to-trough fall) with worked math and interactive charts. 8 min
- 3 Risk-Adjusted Returns: Sharpe, Sortino and Calmar A 60% gain on a calm ride beats 60% on a rollercoaster. Learn the Sharpe, Sortino and Calmar ratios — return per unit of risk — with formulas, worked examples, and an interactive race. 8 min
- 4 Skill vs. the Market: Alpha and Beta Did the manager add skill, or just ride a rising market? Learn beta (market sensitivity) and alpha (return beyond what beta predicts) with CAPM math and an interactive scatter plot. 7 min
- 5 Putting It Together: Reading a Fund Factsheet Eight metrics, one decision. Learn to read ROI, CAGR, volatility, drawdown, Sharpe, Sortino, alpha, and beta together to tell a quality fund from a lucky one. 7 min
- 6 Final Exam: The Investment Metrics Gauntlet A graded, locked capstone exam covering every investment-metrics lesson — ROI, CAGR, volatility, drawdown, Sharpe, Sortino, alpha, beta and reading a factsheet. 16 min
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