# Sharpe and std dev of returns vs std dev of portfolio

Does anyone know if the Sharpe ratio can be calculated using the standard deviation of yearly portfolio returns (rather than the standard deviation of the portfolio)?

What would be the problem of using the standard deviation of the yearly portfolio returns over the standard deviation of the portfolio - especially if you were consistent and applied the same technique to all the Sharpe ratios you were calculating?

Thanks!

What, exactly, do you mean by “standard deviation of the portfolio”?

As I understand it, the std dev of the portfolio is a different calculation than just taking the std dev of the yearly returns of the portfolio. From Investopedia: Not only are the weights of the assets in the portfolio and the standard deviation for each asset in the portfolio needed, the correlation of the assets in the portfolio is also required to determine the portfolio standard deviation. I guess in other words, can I calculate the Sharpe just using the std dev of the yearly returns than the more complicated std dev of the portfolio?

Excuse me please. I’m totally complifying things. I intend to calculate the ex post Sharpe of a portfolio from a 10 yr annual history of returns. The answer is simply the average of the returns less the risk free rate divided by the std dev of the returns from the same 10 yr history and assuming returns are normally distributed. It could not be any easier which is one of the advantages of the ex post Sharpe.

Thank you for attending to my question anyway. I know who to hire for Skype tutoring when I take my test for the first time in Dec 2015.

Yes: if you want the standard deviation (of returns) of the portfolio, you just compute the standard deviation (of returns) of the portfolio; you don’t have to fiddle with the constituent securities.