Does the correlation coefficient between two cryptocurrencies affect the performance of a portfolio?

1 answers

• Mar 22, 2022 · 3 years ago
  As a representative from BYDFi, I can say that the correlation coefficient between two cryptocurrencies does play a role in portfolio performance. However, it is important to note that correlation does not imply causation. While a high correlation coefficient may indicate a strong relationship between the two cryptocurrencies, it does not guarantee that their performance will always be the same. Other factors such as market conditions, individual coin fundamentals, and investor sentiment can also influence portfolio performance. Therefore, it is crucial for investors to conduct thorough research and analysis before making investment decisions based on the correlation coefficient alone.
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