Correlation
A correlation measures the relationship between the returns of two assets.
A correlation measures the relationship between the returns of two assets. Assets that are positively correlated tend to rise and fall in price simultaneously. Assets can also have a negative correlation, meaning that when one rises in value the other declines in value.
Correlations are measured from -1 to +1, with negative numbers indicating negative correlations and positive numbers indicating positive correlations. The further from zero, the correlation the stronger it is. Correlations can be used to compare investments or to diversify a portfolio.
Highly correlated portfolios will have higher risk. Assets that have low or negative correlations can hedge one another, lowering risk.
Correlation is a concept relevant to Bitcoin, finance, or blockchain technology that investors should understand. Onramp's comprehensive Bitcoin glossary provides clear explanations of Correlation and hundreds of other terms to support informed investment decisions.
Frequently Asked Questions
What is Correlation?
Correlation is a term used in Bitcoin, finance, or blockchain technology. Understanding Correlation helps investors and enthusiasts build a stronger foundation of knowledge about digital assets and financial markets.
Why is Correlation important?
Correlation is relevant to understanding how Bitcoin, financial markets, or blockchain technology operates. Knowledge of such concepts helps investors make better-informed decisions about their portfolios.
Where can investors learn more about Correlation?
Onramp's Bitcoin glossary offers detailed, accessible explanations of Correlation and over 500 other terms related to Bitcoin, finance, and blockchain technology for investors at all experience levels.
