Equity, Bond, and Digital Asset Prices, A Tripartite Analysis

<div> <div> <div> <p><span>The correlations and spill-over effects between and among the prices of various asset classes have increasingly given researchers and professionals some curiosity. The aim of this research is to carryout empirical tests of these correlations and spillover effects. I use the log of daily prices of 10 Year US Treasury Notes and daily prices of JP Morgan Corporate Bond ETF as proxies for the Bond Market; log of S&amp;P500 daily prices and NASDAQ100 daily prices as proxies for the Equity Market; and lastly the log of BTC/USD and ETH/USD daily prices as proxies for the Digital Asset Market. I employ the OLS Multiple Linear Regression Model to see the scientific magnitude and directions of effects that link these variables. I also perform a correlation test to see the correlation coefficients that tie these variables. To aid readers views and understandings, I present a pictorial chart that shows the historical price movement of the variables under study. In the end, the paper concludes that asset prices largely move proportionately alongside the prices of assets in the same class. Also, holding other factors constant, prices of digital assets show positive correlation magnitudes with prices from both bond and equity assets. In addition, the paper concludes that if other factors are held constant, a negative correlation seems to exist between the prices in debt and equity market. Finally, the paper recommends that investors should objectively carryout a critical analysis of their risk appetites and every relevant risk factors before deciding whether to invest in debt, equity, or digital asset instruments. Lastly, the paper opines that there is the need for further research to better understand the interrelationships between these financial instruments.</span></p> </div> </div> </div>