The coefficient of variation is a better measure of stand-alone risk than standard deviation because it is a standardized measure of risk per unit; it is calculated as the divided by the expected return. the coefficient of variation shows the risk per unit of return, so it provides a more meaningful risk measure when the expected returns on two alternatives are not . the sharpe ratio compares the asset's realized excess return to its over a specified period. excess returns measure the amount that investment returns are above the risk-free rate — so investments with returns equal to the risk-free rate will have a sharpe ratio. it follows that over a given time period, investments with sharpe ratios performed better, because they generated higher excess returns per unit of risk. the sharpe ratio is calculated as: