Factor-Based Return Analysis

Factor-based return analysis decomposes portfolio returns into contributions from various risk factors, such as market beta, size, value, or momentum. This helps traders understand the underlying drivers of their performance beyond simple directional bets.

By identifying which factors are driving returns, traders can better manage their risk and optimize their portfolio composition. This approach is common in traditional finance and is increasingly applied to cryptocurrency markets.

It provides a more nuanced view of performance and helps in building more resilient portfolios. It is an essential tool for sophisticated investors and professional portfolio managers.