How does a negative correlation between Bitcoin and altcoins affect portfolio diversification?

1 answers

• Nov 23, 2021 · 3 years ago
  At BYDFi, we believe that a negative correlation between Bitcoin and altcoins can play a crucial role in portfolio diversification. By including both Bitcoin and altcoins in a portfolio, investors can potentially benefit from the diversification effect. When Bitcoin's price is declining, altcoins may have the potential to outperform, and vice versa. This can help to reduce the overall risk of the portfolio and enhance potential returns. However, it's important to note that diversification alone cannot guarantee profits or protect against losses. Investors should conduct thorough research and consider their risk tolerance before making any investment decisions.
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