<p>This study examines the impact of integrating cryptocurrencies with traditional assets on portfolio risk, using Value-at-Risk (VaR) and DCC MGARCH models between January 2018 and December 2023. Our findings reveal that cryptocurrencies exhibit varying effects on risk management, with conventional cryptocurrencies generally outperforming asset-backed ones in reducing portfolio risks. Bitcoin consistently serves as a risk mitigator in both developed and emerging markets, while Ethereum offers selective risk reduction. Binance Coin shows diversification potential, but many other conventional cryptocurrencies increase risk levels. Among asset-backed options, USD-backed cryptocurrencies significantly reduce risk, in contrast to the risk amplification observed in gold-backed cryptocurrencies, particularly Islamic gold-backed assets. Static VaR results align with DCC MGARCH findings, showing increased risk during market turmoil with Islamic gold-backed cryptocurrencies. The dynamic results further underscore the risk-mitigating abilities of USD-backed cryptocurrencies across market conditions. These insights emphasise the strategic selection of cryptocurrencies for effective risk management. Our findings hold significant implications for investors, fund managers, and policymakers, stressing the need for informed decision-making and nuanced regulation in the integration of cryptocurrencies into investment portfolios. We contribute to the evolving landscape of financial instruments by highlighting the unique risk profiles of cryptocurrencies and their role in portfolio risk management.</p>