Maximizing Risk-Adjusted Returns in Crypto

Published on
March 2nd, 2021
65 minutes

Maximizing Risk-Adjusted Returns in Crypto

The Interview - Crypto ·
Featuring Benjamin Cowen and Sebastian Moonjava

Published on: March 2nd, 2021 • Duration: 65 minutes

Benjamin Cowen, PhD, founder of Into the Cryptoverse newsletter and Youtube channel, joins Sebastian Moonjava, Real Vision associate crypto editor, to discuss modern portfolio theory, the potential benefits to a diversified crypto portfolio, and crypto market trends. Cowen describes what modern portfolio theory is, providing examples like historical data to find a maximum Sharpe ratio on the efficient frontier for the best risk-adjusted returns. He explains how adding some exposure to more volatile assets may increase one’s overall portfolio performance. Cowen shares several charts showing the trends of the overall crypto market cap and illustrates how to use this data to better understand where we may be at in this crypto market cycle. He explains that including certain pairs in your portfolio may help offset their negative volatility. Filmed on February 24, 2021.

Key Learnings: Modern portfolio theory helps investors construct portfolios that meet their risk-adjusted return goals. Some asset pairings in a portfolio can help offset each other’s negative volatility. Investors can apply some traditional portfolio theory to crypto, but this can be difficult to do since so many of these assets are very young with limited historical data to base the analysis off of.