Explain 'Sharpe Ratio' vs 'Sortino Ratio'.

Explain 'Sharpe Ratio' vs 'Sortino Ratio'.

Approach: Compare measures of risk-adjusted return.

Sharpe Ratio divides excess return by total standard deviation. Sortino Ratio only uses downside semi-deviation, penalizing only negative volatility (bad risk).

Follow-up: When would you prefer the Sortino ratio?

Key concepts: excess return, downside deviation, standard deviation.