Need diversification? Consider adding cryptocurrency, the least correlated asset class

The following analysis by The Block shows that there is no correlation between bitcoin (and other cryptocurrencies) and traditional asset classes, indicating that a small exposure to cryptocurrency markets could be useful to diversify a traditional portfolio.

In order to measure the correlation between cryptocurrencies and traditional asset classes, the Pearson correlation coefficient is used. The coefficient ranges from -1 to 1. A correlation of 1 shows a perfect positive correlation while -1 shows a perfect negative correlation. A correlation of 0 shows no relationship between the movement of the two variables.

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