Capital allocation line (CAL) is a graph created by investors to measure the risk of risky and risk-free assets. The graph displays the return to be made by taking on a certain level of risk. Its slope is known as the “reward-to-variability ratio“.
- ^Sharpe, William. “Mutual Fund Performance” (PDF). The Journal of Business. vol.39, no.1 , pt 2: 119-138.