What does Caleb focus on when utilizing the Sortino Ratio?

Caleb focuses on the downside performance of the investment when utilizing the Sortino Ratio. This financial metric specifically evaluates the risk-adjusted return of an investment by measuring the return relative to the downside deviation, which captures the volatility or risk associated with negative returns.

The Sortino Ratio is designed to provide a more accurate reflection of an investment's performance by considering only harmful fluctuations below a target return, rather than total volatility. This makes it particularly useful for investors who are concerned about losses rather than overall volatility. By emphasizing downside risk, the Sortino Ratio allows Caleb to assess how well an investment performs in unfavorable market conditions while prioritizing the preservation of capital. This focus on downside performance distinguishes it from other risk-adjusted return measures, such as the Sharpe Ratio, which accounts for all volatility, both positive and negative.