stats·Statistics & risk
DSR
Deflated Sharpe Ratio. Adjusts naive Sharpe for the number of trials, return non-normality, and sample size — i.e., the bias farm.
formula
DSR = SR · √( (1 − γ₃·SR + (γ₄−1)/4·SR²) · (1 − e^…) )
How the desk uses this
Statistics and risk terms like this one are the backbone of how the desk sizes positions and reports edge — not vibes, math.