---
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/docs/analysis/return-to-drawdown-ratio"
last_updated: "2026-09-12"
md_url: "https://fincanva.com/docs/analysis/return-to-drawdown-ratio.md"
---

# Return-to-drawdown ratio

The return-to-drawdown ratio is a strategy's return over a period divided by the size of its [max drawdown](/docs/analysis/max-drawdown) in that same period — the return earned per unit of worst peak-to-trough loss. 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. 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

## 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: return is the period's return (the whole-period return for the headline figure, that year's return for a per-year figure), max drawdown is the largest peak-to-trough fall in the same period, and the vertical bars mean its absolute value — the drawdown's size without its minus sign.

## 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](/docs/analysis/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*.

## Defaults in Fincanva

- The 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, in the column its **Each 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.

## Worked example

A strategy returns +80% over its 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](/docs/analysis/longest-drawdown) for duration, and the [Sharpe ratio](/docs/analysis/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.

*These figures describe what a strategy would have done on historical data, not what it will do. Fincanva provides no financial advice — see [Is this financial advice?](/docs/investing-theory/is-this-financial-advice).*