Asset Correlation Tool
Correlation amongst assets is the degree to which they move in tandem.
Diversification is a technique for reducing risk. Most people tend to think this is achieved simply by investing in a variety of assets instead of just a few. This is wrong.
Proper diversification is achieved when you reduce the correlation between the assets in your portfolio.
0.5 to 1.0: Strong positive correlation
Around 0: Little to no correlation
-0.5 to -1.0: Strong negative correlation
Took a few hours to build this one. Later I will add an index for crypto (large cap) and I'll play around with different ways of presenting the data.
If you have any requests or ideas please shoot
Diversification is a technique for reducing risk. Most people tend to think this is achieved simply by investing in a variety of assets instead of just a few. This is wrong.
Proper diversification is achieved when you reduce the correlation between the assets in your portfolio.
0.5 to 1.0: Strong positive correlation
Around 0: Little to no correlation
-0.5 to -1.0: Strong negative correlation
Took a few hours to build this one. Later I will add an index for crypto (large cap) and I'll play around with different ways of presenting the data.
If you have any requests or ideas please shoot
版本注释:
Correlation amongst assets is the degree to which they move in tandem. This indicator measures correlation between different assets. Why is that important?
To any investor diversification is a very important technique for reducing risk. The problem is that most misunderstand it. Most people tend to think diversification is achieved simply by investing in a variety of assets instead of just a few.
This is wrong.
The whole point of diversification is to be invested in assets with different growth drivers. A portfolio consisting of +20 highly correlated assets (Your cryptobags, probably) is the OPPOSITE of diversification.
Proper diversification is achieved when you reduce the correlation between the assets in your portfolio.
0.5 to 1.0: Strong positive correlation
Around 0: Little to no correlation
-0.5 to -1.0: Strong negative correlation
Took a few hours to build this one. It would be super helpful if you can take a look at the index I used - I'm convinced there are better and more accurate methods to this one. But best I could come up with
Later I will evolve this one to an oscillator that measures the relation between cross coin correlations and volatility. Inspired by some great work by @cryptorae
If you have any requests or ideas please shoot
Updates v0.2
- Added altcoin index
- Changed some calculations
- Restructed code
To any investor diversification is a very important technique for reducing risk. The problem is that most misunderstand it. Most people tend to think diversification is achieved simply by investing in a variety of assets instead of just a few.
This is wrong.
The whole point of diversification is to be invested in assets with different growth drivers. A portfolio consisting of +20 highly correlated assets (Your cryptobags, probably) is the OPPOSITE of diversification.
Proper diversification is achieved when you reduce the correlation between the assets in your portfolio.
0.5 to 1.0: Strong positive correlation
Around 0: Little to no correlation
-0.5 to -1.0: Strong negative correlation
Took a few hours to build this one. It would be super helpful if you can take a look at the index I used - I'm convinced there are better and more accurate methods to this one. But best I could come up with
Later I will evolve this one to an oscillator that measures the relation between cross coin correlations and volatility. Inspired by some great work by @cryptorae
If you have any requests or ideas please shoot
Updates v0.2
- Added altcoin index
- Changed some calculations
- Restructed code