information ratio and the Square root of time??

CFA Level II
#1

the Information ratio increases with the square root of time. I guess i can see this, because if you have one year to make bets…you’ll probably make better bets.

compared to a quarterly information ratio, you only have 3 months out of the year to make bets. so you’ll Information ratio should be smaller.

***is there a better wayt to think about this?***

#2

Risk is squared, excess return is not.

For every multiple of return (example x2), the risk increases by Sqrt(2).

#3

a quarterly IR will be 0.5 times an annual one

1 / Square root of 4 = 0.5

got it!

thanks!