Bitcoin’s Correlation With Stocks Has Decreased Significantly
Bitcoin’s (BTC) correlation to stock index S&P 500 has seen a substantial decrease, which means that these two asset classes no longer move in the same direction.
The current correlation between the two asset classes stands at 0.15 level, which is almost negligible. Around a month ago, on April 16, the correlation was moderately positive, being at 0.53 level.
A near-zero correlation between two assets such as Bitcoin and stocks means that there is no relationship between them or that they do not move in the same direction.
Correlation is presented as a number between +1 and -1. +1 translates to an absolute positive correlation between certain assets, which means that their prices always move together in the same direction. -1 is a total negative correlation, which means that two assets always take different paths when it comes to price.
If investor has low-correlated or uncorrelated assets in their portfolio, it helps hedge against wild volatility in the times of crises.
On February 2, CryptoTheNews shared a research which covers the profitability of portfolios with Bitcoin and stocks, which are considered as assets with low correlation.