Risk-Adjusted Return is a financial metric that evaluates the return of an investment relative to the risk taken to achieve that return. It helps investors understand how much risk they are assuming for each unit of return, allowing for better comparisons between different investments. Common methods to calculate this include the Sharpe Ratio and Treynor Ratio. By considering both return and risk, investors can make more informed decisions. A higher Risk-Adjusted Return indicates a more favorable investment, as it suggests that the investment is generating good returns without taking on excessive risk. This approach is essential for effective portfolio management.