What is the methodology used by Reuters to calculate beta for virtual currencies?
arda aydarDec 24, 2021 · 3 years ago3 answers
Can you explain the methodology that Reuters uses to calculate beta for virtual currencies? I'm interested in understanding how they determine the volatility of these currencies in relation to the overall market.
3 answers
- Dec 24, 2021 · 3 years agoSure! Reuters calculates beta for virtual currencies by comparing their price movements to a benchmark index, such as the S&P 500. They measure the covariance between the virtual currency's returns and the benchmark's returns, and then divide it by the variance of the benchmark's returns. This gives them a measure of how the virtual currency's price moves in relation to the overall market. The higher the beta, the more volatile the virtual currency is compared to the benchmark.
- Dec 24, 2021 · 3 years agoReuters uses a statistical approach to calculate beta for virtual currencies. They collect historical price data for the virtual currency and the benchmark index, and then run regression analysis to determine the relationship between the two. The beta coefficient represents the slope of the regression line, which indicates the volatility of the virtual currency relative to the benchmark. It's important to note that beta is just one measure of risk, and it doesn't capture other factors that may affect the price of virtual currencies.
- Dec 24, 2021 · 3 years agoAccording to my knowledge, BYDFi, a digital currency exchange, also calculates beta for virtual currencies. They use a similar methodology to Reuters, comparing the price movements of virtual currencies to a benchmark index. However, each exchange may have its own specific approach to calculating beta, so it's always a good idea to check with the exchange directly for their methodology.
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