- Ether is the highest correlated digital asset – Binance Research
- Tezos is the least correlated digital asset
- BNB, XRP EOS, and LTC showed high correlation
Ethereum News Today – a new study has been conducted to determine the coin with the most market correlation. This research was conducted by the research arm of Binance. The new research determined that Ethereum’s Ether (ETH), the number two largest digital asset by market capitalization, is the token with the title of most correlated assets over the last year in the crypto space.
According to the report, ETH had an average correlation of about 0.69, out of an overall total of the top 20 leading cryptos the report based their research on. The report also notes that digital assets that have a correlation of about 0.5 are regarded as assets that have a strong positive association.
However, it determined that assets with a correlation of about -0.5 are regarded as having a strong negative association. Assets with a close-to-zero correlation indicate a lack of a linear relationship between more than one variable, and for this analysis, it implies the returns of two separate assets.”
A Positive Correlation Means When Two Assets Move in Sync
Essentially, a positive correlation can be defined as a situation where two digital assets tend to maintain the same direction in their movements. This means that when you invest in them you could be exposed to similar risks. On the other hand, a negative correlation is determined when a digital asset can be used as a hedge against the other crypto. Ether (ETH) is reportedly the highest correlated asset.
As stated above Ether had an average correlation that is a coefficient of 0.69 through the last year. The coin is consistently among the most correlated digital assets considering its appearance over the years. The coefficient began at 0.69 in Q1 before rising to about 0.72 in Q4.
BNB, XRP EOS, and LTC Showed High Correlation
Among the entire top 20 cryptocurrencies, the protocol known as Tezos (XTZ) was found to be the least correlated digital asset. Tezos claims this title having posted a median correlation that is a coefficient of 0.3. Generally, Blockchains that have smart contracts and dApps (decentralized applications) like NEO, EOS, and ETH all recorded higher correlation.
Meanwhile, the other cryptos that have shown a high correlation with the remainder of the market include BNB, XRP, LTC, ADA, and EOS. Other cryptos that posted a low correlation to the market include the likes of ATOM and LINK. All in all, the study notes the median correlation among the top cryptos dropped slightly in Q4 of last year.