A 6% carry in a pair that moves 6% a year is a very different proposition from a 6% carry in one that moves 20%. Dividing one by the other produces a crude but useful screen, and it is why carry baskets are usually built from the best ratios rather than the highest raw yields.
The metric flatters carry trades precisely when they are most dangerous. Volatility is low during the calm accumulation phase, so the ratio looks excellent right up to the carry-unwind, when realised volatility triples and the position is exited at the worst prices.
Anyone using it should pair it with a scenario check: how far can the pair move in a single bad week, and does the accumulated carry cover a plausible fraction of that.
Example: a pair offering 5.5% of annual carry with 8% annualised volatility scores 0.69. Another offering 11% with 22% volatility scores 0.5, so the higher-yielding trade is worse per unit of risk.
Related: carry-trade, carry-unwind, emerging-market-currency, real-interest-rate