🌱 Portfolio diversification

Scenario: Reducing exposure to market volatility

Portfolio managers looking to diversify their investments while minimizing risk exposure can include IRDs as part of their portfolio. These instruments typically have low correlation with traditional crypto asset price movements, providing a hedge against systemic interest rate changes.

Example:

A portfolio manager adds fixed-rate futures to a portfolio dominated by volatile crypto assets like Bitcoin and Ethereum. The fixed-rate futures help mitigate adverse interest rate movements that could impact other assets in the portfolio, ensuring more consistent overall returns and reducing the portfolio's exposure to volatility.