Engineering Alpha

Engineering Alpha

What is the Deflated Sharpe Ratio?

Understanding the Main Difference between the Sharpe Ratio and the DSR

Sofien Kaabar, CFA's avatar
Sofien Kaabar, CFA
Jan 13, 2026
∙ Paid

If you’ve spent any time around investing, quant finance, or portfolio management, you’ve met the Sharpe ratio. It’s the first metric people quote when they want to sound rigorous. It shows up in pitch decks, research papers, threads, and backtests.

High Sharpe? Smart strategy. Low Sharpe? Probably trash.

The problem is that the Sharpe ratio is far easie…

User's avatar

Continue reading this post for free, courtesy of Sofien Kaabar, CFA.

Or purchase a paid subscription.
© 2026 Sofien Kaabar · Privacy ∙ Terms ∙ Collection notice
Start your SubstackGet the app
Substack is the home for great culture