Cryptocurrency Volatility and its Implications for Portfolio Diversification: An Empirical Study

Abstract

This empirical study examines the volatility characteristics of major cryptocurrencies (e.g., Bitcoin, Ethereum) and their potential role in diversifying traditional investment portfolios. Employing econometric models, the research analyzes historical price data to assess the correlation between cryptocurrency returns and those of conventional assets (stocks, bonds, commodities). The aim is to determine if and how the inclusion of cryptocurrencies can enhance risk-adjusted returns for investors, providing insights into the evolving landscape of digital asset integration within financial markets