Treynor Index

The Treynor Index, more commonly known as the Treynor Ratio (See: Treynor Ratio), is a portfolio performance measure. It tells you the returns you’ve gotten per unit of risk taken.

The bigger your Treynor Index, the greater excess returns you have. The more bang for your buck, the more returns for risk taken. It’s a good metric to see if your balanced portfolio is performing remarkably well...or falling flat on its face.

Compared to many portfolio performance tools, it’s pretty simple, too. Just take your portfolio returns, subtract your risk-free rate, and divide by your portfolio’s beta. As we always say...beta to have more excess returns than none at all.