Bitcoin’s correlation to stocks has declined significantly

6

Bitcoin’s correlation to stock index S&P 500 has declined significantly, hinting that the two asset classes no longer move in the same direction.

The correlation between bitcoin and S&P 500, measured via BTC/USD on Coinbase and S&P 500 futures, has touched a two-month low.

The current correlation between the two asset classes is 0.15, which means it is nearly negligible. About a month ago, on April 16, the correlation was moderately positive at 0.53.

Source: TradingView, The Block Research 

A near-zero correlation between two assets indicates that there is no relationship between them or that they do not move in the same direction.

Correlation is expressed as a number between +1 and -1. +1 indicates an absolute positive correlation between two assets, meaning they always move together in the same direction. -1 indicates a total negative correlation, meaning two assets always move in opposite directions of each other.

Having two low-correlated or uncorrelated assets in a portfolio helps lower overall volatility.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


Bitcoin’s correlation to stocks has declined significantly written by Yogita Khatri @ https://www.theblockcrypto.com/linked/65219/bitcoins-correlation-to-stocks-has-declined-significantly?utm_source=rss&utm_medium=rss May 14, 2020 Yogita Khatri

Comments are closed.