What are the key metrics to consider when backtesting a cryptocurrency portfolio?

1 answers

• Allen OlsenFeb 08, 2026 · 9 days ago
  When backtesting a cryptocurrency portfolio, it's important to consider a few key metrics that can help evaluate its performance. One such metric is the overall return on investment (ROI). This metric measures the profitability of the portfolio and can indicate whether it is generating positive returns. Another important metric is the volatility of the portfolio. Volatility measures the degree of price fluctuations and can give insights into the risk associated with the portfolio. A higher volatility indicates higher risk, while a lower volatility suggests a more stable portfolio. Additionally, the maximum drawdown is an important metric to consider. This metric measures the largest loss experienced by the portfolio and can provide insights into the potential downside risk. The Sharpe ratio is another useful metric that takes into account both the return and the risk of the portfolio, providing a measure of risk-adjusted performance. Lastly, the correlation with the market can help determine how closely the portfolio moves in relation to the overall market. A high correlation indicates that the portfolio is highly influenced by market movements, while a low correlation suggests that it may have a more independent performance. By considering these key metrics, investors can gain a better understanding of the performance and risk associated with their cryptocurrency portfolios.
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