M Squared: What is M Squared?

The M Squared Modigliani risk-adjusted performance (RAP) measure or ratio is an enhancement of the earlier Sharpe ratio. In this video we explain the origin of the M Squared ratio and compare and contrast it with the Sharpe ratio. We explain what it calculates and how it calculates it, to give you a percentage figure to indicate the risk-adjusted differences between two portfolios, one of which is a benchmark portfolio, and the other of which is a target portfolio under investigation. Once we have worked through the M Squared equation, we then use Excel and the Finlingo app to step through several examples to explain what is so useful about the M Squared ratio. Remember to download the Finlingo app on the App Store here: https://apps.apple.com/ph/app/cfa-total-recall/id1542295415 Alternatively, download it on the Google Play Store here: https://play.google.com/store/apps/details?id=com.finlingo.cfa.total.recall Once you practice enough, you’ll be a master!