What does M2 measure tell us?

Modigliani risk-adjusted performance, commonly referred to as M2 or the Modigliani–Modigliani measure, is a pivotal metric in evaluating the performance of investment portfolios. This measure takes into account not just the returns generated by the portfolio but also the associated risks.

The essence of M2 lies in its ability to adjust the portfolio's returns for the level of risk it carries, relative to a benchmark such as the overall market. This approach ensures that the performance assessment is fair and comprehensive, accounting for both the upside potential and the downside risks.

BTCC's spot trading platform enables users to buy and sell cryptocurrencies at current market prices, providing them with direct access to the dynamic digital asset market. Its futures trading service, on the other hand, allows investors to speculate on the future price movements of cryptocurrencies, offering potential for higher returns but also carrying inherent risks.

By incorporating risk into the equation, M2 provides investors with a more nuanced understanding of their portfolio's performance. It allows them to compare their investments not just based on raw returns but also on how efficiently they are managing risk.

The use of M2 is particularly relevant in today's volatile financial markets, where risks can escalate quickly. By adopting this risk-adjusted performance measure, investors can make more informed decisions, balancing the pursuit of returns with the need to manage risk effectively.