Sharpe ratio was developed by Nobel laureate William F. Sharpe and is used to help investors understand the return of portfolio compared to market risks. The ratio is the average return earned in excess of the risk-free rate per unit risk.
In this project, I use two of America tech-giant (NASDAQ: AMZN and NASDAQ: FB) and S&P500 closing price as the benchmark, instead of risk-free rates like government bonds. After examining the data using Sharpe Ratio, for 2016, NASDAQ: AMZN is a much better investment than NASDAQ: FB.