Comparative Analysis Of Xrp, Bitcoin, Ethereum Correlations
Investing in cryptocurrencies is becoming more and more popular, and many investors are looking to maximize their returns by understanding the correlations between different cryptocurrencies.
In this article, we’ll take a look at the historical correlations between XRP, Bitcoin, and Ethereum to see how they have interacted in the past and what implications this has for investors.
We’ll explore the correlations between these three popular cryptocurrencies and discuss the implications of these correlations for investors.
Historical Correlation Analysis
Looking at historical correlations, it’s clear that Ethereum and Bitcoin have had a much stronger relationship than either of them have had with XRP.
This is especially true when looking at the period from March 2017 to March 2018. During this time frame, the correlation between Ethereum and Bitcoin was .92, while the correlation between XRP and Bitcoin was only .62, and the correlation between XRP and Ethereum was only .40.
This indicates that the relationship between Ethereum and Bitcoin has been much stronger than the relationship between either of them and XRP.
It appears that while XRP still has a relationship with both Bitcoin and Ethereum, it isn’t nearly as strong as the relationship between Ethereum and Bitcoin.
Therefore, when considering the three cryptocurrencies in comparison with each other, Ethereum and Bitcoin have the most correlation between them and XRP has the least.
This is an important factor to consider when making investment decisions involving these three cryptocurrencies.
XRP vs. Bitcoin Correlation
You may be surprised to find that XRP and Bitcoin do not always move in tandem. On a long-term basis, the correlation between the two digital assets has been fairly weak.
Over the past three years, the correlation between XRP and Bitcoin has ranged from -0.2 to 0.2. This means that on any given day, the two assets could move in the same direction, the opposite direction, or have no correlation at all.
In short, XRP and Bitcoin are not always directly correlated with one another. On a short-term basis, however, there can be a stronger correlation between the two assets. At times, they may move in the same direction, while at other times, they may move in opposite directions.
Overall, the correlation between XRP and Bitcoin is fairly weak, but it can be stronger in the short-term.
XRP vs. Ethereum Correlation
Unlike XRP and Bitcoin, the correlation between XRP and Ethereum is usually quite strong. The two digital assets have a positive correlation, meaning that when Ethereum prices rise, so do the prices of XRP.
This correlation exists because the two digital assets are commonly used together in trading and investing activities. The two digital assets are often used to diversify investments or to hedge against market volatility. This means that when one asset performs poorly, the other is likely to rise in value so as to offset the losses.
Additionally, many investors use both XRP and Ethereum to take advantage of arbitrage opportunities. This can further strengthen the correlation between the two digital assets.
Overall, XRP and Ethereum have a strong positive correlation, making them a great pair for trading and investing activities.
Bitcoin vs. Ethereum Correlation
Feeling the volatility of the digital asset market? Understanding the correlation between Bitcoin and Ethereum can help you make smart investment decisions.
Over the past several years, the correlation between Bitcoin and Ethereum has fluctuated significantly. In 2018, the correlation between the two assets was only 0.12, indicating that the two assets had little to no relationship with each other.
However, the correlation has since risen and, as of January 2020, the correlation between Bitcoin and Ethereum was 0.69, which implies that the two assets moved in the same direction more often than not.
It’s important to note that the correlation between Bitcoin and Ethereum is not static. While Bitcoin and Ethereum have had a relatively high correlation over the past few months, there have been times in the past when the correlation was much lower.
Therefore, it’s important to understand the relationship between Bitcoin and Ethereum and to keep an eye on the correlation between the two assets in order to make informed investment decisions.
Investing Implications of Correlations
Investing in digital assets can be unpredictable, so understanding the relationship between different digital assets is key to making sound decisions.
Correlations between XRP, Bitcoin, and Ethereum can help investors understand which assets have an influence on each other and make more informed decisions. For example, if Bitcoin and Ethereum have a positive correlation, then when Bitcoin prices increase, the prices of Ethereum could also increase.
On the other hand, if the two assets have a negative correlation, then when Bitcoin prices increase, the prices of Ethereum could decrease.
Knowing the correlation between assets can help investors make decisions about when to buy and sell. Additionally, investors should also consider other factors such as supply and demand, market volatility, and economic news when making investment decisions.
Conclusion
You’ve seen the correlations between XRP, Bitcoin, and Ethereum. Now it’s time to make the most of this knowledge.
With the right investment strategy, you can capitalize on these correlations to maximize your potential returns. For instance, if Bitcoin and Ethereum are highly correlated, you can diversify your portfolio by investing in both.
On the other hand, if XRP and Ethereum have a weak correlation, you can spread out your risk by investing in both.
With the right strategy, you can make the most of the correlations between these digital assets.
