![]() ![]() While the MAR and Calmar ratios are similar in that both measure return per unit of risk, there are differences between the two metrics. In the above example, it is clear that M2 has a better risk-adjusted performance than M1. Now, supposing that both M1 and M2 have similar maximum drawdowns of 15%, then, their respective MAR ratios can be calculated as: MAR (M1) = 30/15 = 2. Consider two hedge funds M1 and M2 with Compound Annual Growth Rates (CAGRs) of 30% and 45% respectively. Let us consider the following example to explain how the MAR ratio can be applied in real-life comparisons. Back to: INVESTMENTS & TRADING How Does the MAR Ratio Work?īasically, the MAR ratio is a measurement of the annualized return per maximum drawdown. ![]() The MAR ratio owes its existence to the Managed Accounts Report newsletter that was founded in 1979 by Leon Rose. ![]() It can be inferred from the above that the higher the MAR ratio, the better the risk-adjusted returns. The MAR ratio can therefore be calculated by dividing the Compound Annual Growth Rate since its inception by the maximum drawdown. Similarly, the Compound Annual Growth Rate (CAGR) is defined as the rate of return that an investment requires in order to grow from its beginning balance to its ending balance, provided that the returns are reinvested. the most drawdown or loss experienced over the entire time period, starting from the inception until the date of query. Risk is defined as the maximum drawdown, i.e. The Managed Account Reports Ratio, popularly known as the MAR Ratio, is a measurement of the return per unit of risk, and is used to compare performances of fund managers, commodity trading advisors and hedge funds. Update Table of Contents What is a MAR Ratio? How Does the MAR Ratio Work? MAR Ratio vs Calmar Ratio What is a MAR Ratio? ![]()
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