Ex hedge fund guy here. You can extend this into continuous space and use that to tell you how much leverage you should have, given some Sharpe ratio.
Results may surprise you (it's a lot for even a modest Sharpe). But also most practitioners aren't going to use the full number. If you've overestimated it you are always worse off on the right side of that.
Results may surprise you (it's a lot for even a modest Sharpe). But also most practitioners aren't going to use the full number. If you've overestimated it you are always worse off on the right side of that.