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Should your fund invest in Bitcoin?

📖 Background

You work as an analyst at an investment fund in New York. Your CFO wants to explore if it is a good idea to invest some of the fund's assets in Bitcoin. You have to prepare a report on this asset and how it compares to the stock market in general.

Should your fund invest in Bitcoin?

📖 Background

You work as an analyst at an investment fund in New York. Your CFO wants to explore if it is a good idea to invest some of the fund's assets in Bitcoin. You have to prepare a report on this asset and how it compares to the stock market in general.

💾 The data

You have access to three files:

Bitcoin daily data in US dollars
  • "date" - date from September 17, 2014 to November 17, 2021
  • "open" - the price at the beginning of the trading day
  • "high" - the highest price reached that day
  • "low" - the lowest price reached that day
  • "close" - the price at the closing of the trading day
  • "volume" - how many Bitcoin were traded that day
S&P 500 daily data
  • "date" - date from September 17, 2014 to November 17, 2021
  • "open" - the index level at the beginning of the trading day
  • "high" - the highest level reached that day
  • "low" - the lowest level reached that day
  • "close" - the level at the closing of the trading day
  • "volume" - how many shares in the companies that make up the index were traded that day
inflation and gold as monthly data
  • "date" - date from September, 2014 to November, 2021
  • "gold_usd" - price in usd of gold for that month
  • "cpi_us" - the inflation index for the US for that month (cpi = consumer price index)

CPI data from the U.S. Bureau of Labor Statistics. Publicly available information.

import pandas as pd
bitcoin = pd.read_csv('./data/bitcoin-usd.csv', parse_dates=['date'])
bitcoin.head()
sp500 = pd.read_csv('./data/sp500.csv', parse_dates=['date'])
sp500.head()
monthly_data = pd.read_csv('./data/monthly_data.csv', parse_dates=['date'])
monthly_data.head()

💪 Competition challenge

Create a report that covers the following:

  1. How does the performance of Bitcoin compare to the S&P 500 and the price of gold?
  2. Analyze Bitcoin's returns and volatility profile. Do you believe it could help improve the performance of a portfolio? Do you believe Bitcoin could be used as a hedge versus inflation?
  3. The CFO is looking to lower volatility in the fund. Explore building a portfolio using some or all of these assets. Make a recommendation that minimizes overall risk.

🧑‍⚖️ Judging criteria

CATEGORYWEIGHTINGDETAILS
Recommendations35%
  • Clarity of recommendations - how clear and well presented the recommendation is.
  • Quality of recommendations - are appropriate analytical techniques used & are the conclusions valid?
  • Number of relevant insights found for the target audience.
Storytelling30%
  • How well the data and insights are connected to the recommendation.
  • How the narrative and whole report connects together.
  • Balancing making the report in depth enough but also concise.
Visualizations25%
  • Appropriateness of visualization used.
  • Clarity of insight from visualization.
Votes10%
  • Up voting - most upvoted entries get the most points.

✅ Checklist before publishing into the competition

  • Rename your workspace to make it descriptive of your work. N.B. you should leave the notebook name as notebook.ipynb.
  • Remove redundant cells like the judging criteria so the workbook is focused on your story.
  • Make sure the workbook reads well and explains how you found your insights.
  • Check that all the cells run without error.

⌛️ Time is ticking. Good luck!