---
title: "Return-to-drawdown ratio"
description: "The return-to-drawdown ratio is a strategy's return divided by its max drawdown — a plain ratio, not a percentage: return earned per unit of worst loss."
canonical_url: "https://fincanva.com/glossary/return-to-drawdown-ratio"
last_updated: "2026-10-07"
md_url: "https://fincanva.com/glossary/return-to-drawdown-ratio.md"
---

# Return-to-drawdown ratio

The return-to-drawdown ratio is a [strategy](/glossary/strategy)'s return over a period divided by the size of its [max drawdown](/glossary/max-drawdown) in that same period — the return earned per unit of worst peak-to-trough loss. It is a standard, publicly known ratio, not a proprietary Fincanva measure.

**Also seen as:** NP/DD, NPDD, NP max DD, net profit ÷ maximum drawdown

It answers "how much return did this strategy produce for the deepest fall it put up with?", which a return figure on its own cannot say.

## How is the return-to-drawdown ratio calculated?

The ratio divides the period's return by the absolute size of the max drawdown, so the drawdown's minus sign does not flip the result.

$$
{\text{return-to-drawdown ratio}} = \frac{{\text{return}}}{\lvert{\text{max drawdown}}\rvert}
$$

where:

- the return earned per unit of worst loss
- the period's return — the whole period for the headline figure, that year for a per-year figure
- the largest peak-to-trough fall in the same period, taken without its minus sign

For the headline figure the return is the [whole-period return](/glossary/total-return); for a per-year figure it is that year's return.

## How does Fincanva handle it?

- The [metrics table](/glossary/metrics-table) shows it in the **Drawdown** group as the row **Return-to-drawdown ratio**, as a plain number.
- The by-year table gives a **Return-to-drawdown ratio** column per calendar year. The Strategy analytics page gives one bar per strategy inside a [Combined](/glossary/combined), in the column its **Each sub-strategy, against the Combined** card labels **Return / fall** — the same ratio under a shorter name, because that card puts four figures side by side.
- The [monthly returns heatmap](/docs/analysis/reading-the-monthly-returns-heatmap) carries the same per-year figure in its compact **NP/DD** column — net profit divided by maximum drawdown, the same quantity under an abbreviated label.
- It turns negative when the period's return is negative, because the denominator is always a positive size: a negative ratio means the strategy lost money over that period.
- Where the figure is not available for a period, Fincanva shows "—" rather than a number.

## Why is it a ratio and not a percentage?

The return-to-drawdown ratio is a **plain number**, not a percentage, because it divides one percentage by another and the units cancel out. A value of 4.0 means the return was four times the size of the worst drawdown; it does **not** mean 4%, and it does not mean 400%.

Since a percentage divided by a percentage has no unit, the figure is shown as a bare number everywhere it appears in Fincanva — the metrics table, the by-year table, the [Strategy analytics](/glossary/strategy-analytics) page, and the heatmap's **NP/DD** column. Reading it as a percentage is the most common mistake made with this metric, and it is why the canonical name carries the word *ratio*.

## What does it look like in practice?

A strategy returns +80% over its [backtest](/glossary/backtest) and its max drawdown in the same period is −20%. The ratio is 80 ÷ 20 = **4.0**: four units of return for every unit of the worst fall.

Compare a second strategy that also returns +80% but whose max drawdown was −40%. Its ratio is 80 ÷ 40 = 2.0. On return alone the two look identical; the ratio separates them by what each went through to get there.

## What counts as a good value?

A higher ratio means more return per unit of the worst fall. A ratio above 1.0 means the period's return was larger than its deepest drawdown; below 1.0, the deepest fall was larger than the return earned; a negative value means the period's return was itself negative.

The ratio uses only the *single deepest* fall, so it says nothing about how often drawdowns happened or how long they lasted — read it next to [longest drawdown](/glossary/longest-drawdown) for duration, and the [Sharpe ratio](/glossary/sharpe-ratio) for return measured against overall variability instead of one worst-case event. It is also period-bound: a short window containing one mild dip can produce a very high ratio.

Fincanva is for education and illustration only. It is not personalised financial advice, and past or simulated results do not predict future ones. [Read the Terms Addendum](https://fincanva.com/terms/addendum#section-3)