Question 1

What does crypto correlation coefficient mean?

Accepted Answer

The correlation coefficient measures how closely two cryptocurrencies' prices move together, ranging from -1 to +1. +1 means perfectly correlated (move together), -1 means inversely correlated, and 0 means no correlation.

Question 2

How can I use correlation analysis to optimize my portfolio?

Accepted Answer

Choose coins with low or negative correlation to diversify risk. For example, if BTC drops but you hold negatively correlated assets, your overall portfolio losses can be reduced.

Question 3

Does crypto correlation change over time?

Accepted Answer

Yes. Cryptocurrency correlations are not fixed and shift with time and market conditions. During panic sell-offs, most coins tend toward high positive correlation (falling together); during bull markets, more divergence may appear.

Question 4

Which cryptocurrencies typically have lower correlation?

Accepted Answer

Generally, different types of coins (e.g., BTC vs stablecoin-related DeFi tokens) may have lower correlation. Newer coins may initially show low correlation with BTC, but this tends to converge over time.

Question 5

What time periods does the NowToCrypto correlation matrix use?

Accepted Answer

NowToCrypto provides correlation calculations across multiple timeframes. You can switch between short-term (7 days), medium-term (30 days), and long-term (90 days) to understand dynamic relationships between coins.

Correlation Matrix