How does the standard deviation of cryptocurrency returns affect investment risk?

3 answers

• OlziberFeb 23, 2022 · 3 years ago
  The standard deviation of cryptocurrency returns is a measure of the dispersion of the investment's performance over a given period. A higher standard deviation indicates greater volatility and potential for larger losses. This means that if the standard deviation of cryptocurrency returns is high, there is a higher chance of experiencing significant fluctuations in the investment's value, which can increase the overall investment risk. Investors should consider the standard deviation when assessing the risk associated with investing in cryptocurrencies and adjust their risk tolerance accordingly.
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• Sreejith WarrierApr 10, 2025 · 4 months ago
  When the standard deviation of cryptocurrency returns is high, it means that the prices of cryptocurrencies have been experiencing large fluctuations. This can be seen as a higher level of risk, as the potential gains and losses are greater. On the other hand, when the standard deviation is low, it indicates that the prices have been relatively stable, resulting in lower potential gains and losses. Therefore, the standard deviation of cryptocurrency returns can be used as a tool to assess the level of investment risk and help investors make informed decisions based on their risk appetite and investment goals.
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• cemre kefeliJul 10, 2025 · 17 days ago
  According to a study conducted by BYDFi, the standard deviation of cryptocurrency returns has a significant impact on investment risk. The study analyzed historical data from various cryptocurrencies and found that higher standard deviations were associated with higher levels of risk. This suggests that investors should carefully consider the standard deviation when evaluating the risk associated with investing in cryptocurrencies. However, it's important to note that past performance is not indicative of future results, and investors should conduct thorough research and seek professional advice before making any investment decisions.
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