Analyze the Impact of Bitcoin on Stock Portfolio’s Risk and Return Based on Past 3 Years’ Data

Abstract

Everyone is eager for high yield and low risk. In this research, we use Markowitz's investment theory and Monte Carlo simulation to find the optimal investment portfolio and then study the impact of adding Bitcoin to the traditional investment portfolio on the cumulative rate of return. Our results show that the return performance of the investment portfolio with Bitcoin is better than that of the traditional investment portfolio. Moreover, despite the impact of COVID-19 on the global economy and the Federal Reserve's quantitative easing policy, it is beneficial for investors to include Bitcoin in their portfolio allocation.