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Can Bitcoin Glitter More Than Gold for Investment Styles?

Muhammad Abubakr Naeem, Mudassar Hasan, Muhammad Arif and Syed Jawad Hussain Shahzad ()

SAGE Open, 2020, vol. 10, issue 2, 2158244020926508

Abstract: We compare the hedging, safe-haven, and diversification potential of gold and Bitcoin for different investment styles and industry portfolios in the United States. We find that gold is at least a weak hedge for the style and industry portfolios except for utilities, energy, and telecom. The hedging potential of gold is comparatively higher for large-cap portfolios, whereas Bitcoin offers minimal hedging effectiveness. However, Bitcoin shows hedging potential for the noncyclical industries. Although investors need a higher amount of investment to hedge the downside risk using gold, it still is a superior hedging instrument compared with Bitcoin. Finally, the analysis using the conditional diversification approach shows that gold is a superior and stable diversifier for style and industry portfolios. Overall, our findings provide evidence of superior safe-haven and hedging potential of gold over Bitcoin.

Keywords: gold; Bitcoin; investment styles; safe-haven; hedge (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:10:y:2020:i:2:p:2158244020926508

DOI: 10.1177/2158244020926508

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