Consider A Portfolio With A Target Allocation Of 5% Bitcoin, Says Fidelity
14 Oct 2020 — Consider a [investment] portfolio with a target allocation of 5% #bitcoin, says Fidelity
Their research shows that Bitcoin’s correlation to other assets from January 2015 to September 2020 is an average of 0.11, indicating there is almost NO relationship between the returns of bitcoin and other assets.
While the use of historical realised returns to make investment decisions is debatable, investment analysis and decision-making is at least partially informed by evaluating historical risk-adjusted returns.
The report added that Bitcoin is maturing and thus the expectation on its volatility will decline in tandem. Bitcoin’s performance going forward may be more gradual, and this will result in continued favourable risk-adjusted returns.
Given bitcoin’s volatility relative to other assets, an allocation to bitcoin may deviate from its target allocation frequently, which requires an active rebalancing strategy, on a more regular basis by investors.
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