How can I calculate the beta of a digital currency?

1 answers

• Sri MadhuFeb 11, 2024 · a year ago
  Calculating the beta of a digital currency is an important step in assessing its risk and potential returns. To calculate the beta, you'll need historical price data for the digital currency and a benchmark index. Start by calculating the returns of both the digital currency and the benchmark index over a specific period of time. Then, calculate the covariance between the returns of the digital currency and the benchmark index. Finally, divide the covariance by the variance of the benchmark index to get the beta. The beta will give you an indication of how the digital currency's price moves in relation to the benchmark index. Keep in mind that beta is just one measure of risk and should be used in conjunction with other factors when making investment decisions.
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