A Comparative Analysis of Risk and Return: Bitcoin vs. the S&P 500
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This research compares Bitcoin and the S&P 500 in terms of return and risk. The study uses daily data from January 2021 until December 2024. The main measures used are average daily return, standard deviation, minimum and maximum returns, and correlation. The results show that Bitcoin had a higher average daily return than the S&P 500 during this period. However, Bitcoin was also much more volatile. Its standard deviation was 3.96%, compared with 1.04% for the S&P 500. The correlation between Bitcoin and the S&P 500 was 0.36, showing a positive but not very strong relationship. The results show that Bitcoin had higher returns during the period studied, but it also had much higher risk.
Keywords
Bitcoin, Cryptocurrency Volatility, Daily Logarithmic Return, Financial Risk Analysis, Investment Risk, Risk And Return, S&P 500, Standard Deviation, Stock Market Correlation