Select Asset Classes And Short-Term Risk Return Trade Off

Abstract

Investors and investments are two inseparable constituents of financial system. However, investors are hardly be able to make informed decisions regarding asset classes for their short-term investments since the returns and risks in the very short term up to say 30 days would be very unpredictable. Still to compensate against the inflation, investors need to invest even their short- term surplus funds in suitable asset classes. While in the end the benefit of average is inherently available to address risk-return trade-off, the case of short-term investments is different. Considering this challenge, this research attempts to illustrate the returns, risks, and the trade-off for select asset classes in short term periods. This article endeavors to briefly discuss the investment decisions by looking at the returns of various asset classes in a very short-term period of about 30 days. The objective of the study is To compute the returns of various asset classes viz., equity in Sensex, gold, USD, and Bitcoin. This study does not rule out the possibility that there could be aberrations during different short- term periods where due to unforeseen, irrational and specific reason driven movements, the return in any of the select asset classes could be exponentially much higher than expected or justified.
Classification-JEL: G10