Asset Correlation Tool

27 thg 10, 2018

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

28 thg 10, 2018

Phát hành các Ghi chú

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