I know what a Sharpe ratio is. It doesn't have anything to do with dividing wins and losses into luck versus skill. It's a measure of return per unit of risk, for one possible normalization of risk.
For companies that can freely borrow and lend at the risk free rate, they want to maximize a sharpe ratio. It has applications in portfolio theory for determining your optimal allocation to risky assets.
This has nothing to do with the decomposition you are trying to give us. 95% or 99% confidence intervals are very useful for that purpose. There is some actual interpretable content in them.
--- In vpFREE@yahoogroups.com, "nightoftheiguana2000" <nightoftheiguana2000@...> wrote:
>
> --- In vpFREE@yahoogroups.com, "vpplayer88" <vpplayer88@> wrote:
> >There isn't much logic to blindly dividing edge by standard deviation.
>
>
> Well, as much as I'd like to take credit, I really can't. It's called the "Sharpe Ratio", proposed by a Nobel laureate:
>
> google.com/search?q=sharpe+ratio
>
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