Having a diversified portfolio is essential for any serious investor. There is a good reason behind the popularity of the phrase, “don’t put all your eggs in one basket” when it comes to assets. One basket, in this case, would be equivalent to investing in only one asset – and if the value of that one asset falls to zero, the whole investment can be lost. Choosing to invest in multiple assets is known as “diversification”. This can be done by either investing in multiple asset classes or by investing in multiple different assets within one asset class. Asset classes differ from one another in the nature of the source of their value. For instance, commodity funds invest in raw materials or primary agricultural products, whereas Forex is a money market asset in which foreign currencies are traded.
In the event of one of the assets failing, a diversified portfolio can help to prevent big losses. You would have the ability to significantly offset the loss of the falling asset if you had other investments. However, in order for this to work effectively, the correlation between the assets in a potential portfolio must be taken into account. An everyday life example of correlation would be that during winter, the sale of coats would go up. Therefore, cold weather and coat sales are positively correlated. The occurrence of one and the sales of the other respectively tend to move up and down together. This is why when investing in multiple assets, the aim should be to find assets that are negatively correlated, where asset returns do not lose and gain value simultaneously.
Taking such events, as well as other details into consideration when investing in multiple asset classes is tricky as it would usually require having different accounts on different platforms, for different assets. This is why Digital Financial Exchange – DIFX, was created. Co-Founder and CEO of DIFX, Jeetu Kataria, is a lifelong multi-asset trader and venture capitalist. Supported by an elite team of leaders in the worlds of banking, technology, marketing and fund management, DIFX is now a series of multi-asset trading tools wherein “cryptocurrencies can be used to trade traditional assets with the cross pairing between all assets.”
Powered by the MetaTrader5 platform, the DIFX ecosystem users can trade over 500 assets in cryptocurrencies, commodities, forex, options, and stock CFDs. Some examples of MetaTrader5’s diverse trading pairs include Bitcoin vs Silver, Bitcoin Cash vs Gold, Ripple vs Swiss Franc, Litecoin vs Japanese Yen and Ethereum vs Ripple.
The vastness and complexity of building an investment portfolio become a lot more manageable when it is possible to build a portfolio in a few clicks or carry а whole investment portfolio in your pocket. The DIFX Android and iOS App give users in-pocket access to a fully insured cross-asset trading platform, as well as the fastest and most secure cryptocurrency exchange with 24/7 support, high liquidity and security.