Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025)

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The Dynamic Relationship Between Market Volatility and Dollar Cost Averaging Strategy Returns: An Empirical Investigation

Authors
Siyuan Sang1, *, Ru Bai2, Haibo Li3
1Algorithm Researcher, Beijing Tianrun New Energy Investment Co., Ltd, Beijing, 100029, China
2Director of Power Trading, Beijing Tianrun New Energy Investment Co., Ltd, Beijing, 100029, China
3Associate Director of Power Trading, Beijing Tianrun New Energy Investment Co., Ltd, Beijing, 100029, China
*Corresponding author. Email: sangsiyuan@gmail.com
Corresponding Author
Siyuan Sang
Available Online 17 September 2025.
DOI
10.2991/978-94-6463-835-6_9How to use a DOI?
Keywords
Dollar-Cost Averaging; Market Volatility; Investment Strategy; Monte Carlo Simulation; Geometric Brownian Motion
Abstract

This study empirically examines the performance of a Dollar-Cost Averaging (DCA) strategy under varying market volatility conditions. DCA, which involves investing a fixed sum at regular intervals, is popular for its risk-mitigation properties. However, its effectiveness, especially relative to lump-sum investing (B&H)—depends on market dynamics. Using Monte Carlo simulations to generate price paths based on geometric Brownian motion, we analyze DCA returns, volatility clustering, and transaction frequency. Results indicate that while DCA underperforms B&H in steadily rising markets, it can offer risk-adjusted advantages in highly volatile scenarios. The study also discusses practical implications for optimizing DCA by adjusting investment frequency and considering transaction costs.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
17 September 2025
ISBN
978-94-6463-835-6
ISSN
2352-5428
DOI
10.2991/978-94-6463-835-6_9How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Siyuan Sang
AU  - Ru Bai
AU  - Haibo Li
PY  - 2025
DA  - 2025/09/17
TI  - The Dynamic Relationship Between Market Volatility and Dollar Cost Averaging Strategy Returns: An Empirical Investigation
BT  - Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025)
PB  - Atlantis Press
SP  - 72
EP  - 79
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-835-6_9
DO  - 10.2991/978-94-6463-835-6_9
ID  - Sang2025
ER  -