Hello. Below, I have run through the calculations of the Sharpe ratio based on my monthly returns. The value is very low and I would welcome any constructive guidance on if my math is correct and if so, what are the major contributing factors for the low value. For example, I trade with equities and options and I am wondering how the sporadic cash flows might affect this ratio. Thank you in advance for your assistance. My fundâs monthly returns for 2011 are as follows: JAN -1.87% FEB -0.45% MAR 0.39% APR 1.16% MAY 1.69% JUN -0.90% JUL 0.61% AUG 1.36% SEP -1.49% My understanding of the formula for the Sharpe Ratio is: (AVG MONTHLY RETURN â MONTHLY RISK FREE RATE) / (STANDARD DEVIATION OF ALL MONTHLY DATA) The calculations I made provided the following results: THE AVG MONTHLY RETURN = .0006 MONTHLY RISK FREE RATE= Based on an assumption of 2%, divided .02 by 12 months or .0017 STANDARD DEVIATION OF ALL MONTHLY RETURNS= .0129 If I substitute these results back into the formula, I get: (.0006 - .0017) / .0129 Or A Sharpe ratio of -.09 Thanks again.