Final answer:
The question involves collecting Bitcoin and S&P 500 price data, calculating their monthly returns, running a regression in Excel to find the slope (Beta), and comparing their volatilities by calculating standard deviations.
Step-by-step explanation:
The student's question pertains to the collection and analysis of financial data sets, specifically focusing on Bitcoin and S&P 500 monthly prices. The tasks include calculating monthly returns, running a regression analysis in Excel, identifying the regression slope (slope=beta), and computing the volatility (standard deviation) of these monthly returns.
- To collect Bitcoin price data and S&P 500 index data, you would typically extract monthly closing prices from financial databases or websites that track market data.
- Monthly returns are calculated by taking the percentage change from one month's closing price to the next. The formula is: ((Pricet - Pricet-1) / Pricet-1) × 100, where Pricet is the closing price of the current month and Pricet-1 is the closing price of the previous month.
- To run a regression in Excel, you would use the Data Analysis toolpack and select Regression. Set Bitcoin returns as the dependent variable (Y) and S&P 500 returns as the independent variable (X) and analyze the output to find the slope (beta).
- Volatility is a measure of the dispersion of returns for a given security. Calculate the standard deviation of monthly returns for both Bitcoin and the S&P 500 to compare volatility.
By comparing the Beta and the volatility of Bitcoin and S&P 500, one can gain insights into their respective risk profiles and the relationship between the two assets.