reynor ratio, also called the Treynor index, is a measure of possible excess returns on investment if more market risk is assumed. The ratio was developed by Jack Treynor. It measures a portfolio’s return earned in excess of what would be earned on a risk-free investment, per unit of market risk or systemic risk. It is the difference of the average return of a portfolio and the average return of a risk-free rate, divided by the beta of the portfolio [(average portfolio return-average return of risk-free rate)/portfolio beta]. It shows how a fund will perform. If the ratio is higher, the performance of the portfolio or stock being analyzed is better.