mp3bu

probably also important to note that if the m2 measure is greater than the market return, the portfolio will plot above the cml.

i've seen the diversification issue with treynor come up a few times now. if you're assessing the performance of a diversified portfolio, sharpe is more appropriate because diversified portfolio assumes all non-systemic risk has been diversified away. on the other hand, if you're evaluating a small or non-diversifed, portfolio, treynor is the better metric because it takes into account specific risk (non-systemic).