Correlation of Cryptocurrencies

BINANCE:BTCUSDT   Bitcoin / TetherUS
“Correlation statistically measures the strength of a linear relationship between two relative movements of two variables and ranges from 0 to 1.”
In general, assets with a correlation above 0.5 or below are considered to have strong positive/negative correlations. Conversely, a close-to-zero correlation indicates no linear relationship between two variables, and for the purpose of this analysis, the returns of two assets.If the returns of two assets do exhibit a positive correlation, it implies that the two assets are, to some extent, moving in the same direction, and therefore share similar risks. On the other hand, a negative correlation between the returns of two assets indicates that the two assets are moving in opposite directions, and it is thus possible to use one asset as a hedge against the other.
Based on this analysis, correlations are highest between altcoins and Bitcoin itself (~ average correlation of 0.69), indicating that most of the altcoins move in similar directions as Bitcoin , underscoring Bitcoin’s status as a bellwether for cryptoasset markets.While, generally speaking, altcoins are highly correlated with BTC , select cryptoassets exhibit materially weaker correlations both with BTC and among one another, which suggests that additional idiosyncratic factors may affect the prices and returns of these assets.
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