Crypto Correlation Matrix
What is a Correlation Matrix?
Shows how closely assets move together. Values from -1 (opposite) to +1 (aligned). For diversification, you want low or negative correlation.
Crypto Correlation Reality
BTC-ETH: 0.7-0.9 (high). BTC-SOL: 0.4-0.7 (moderate). During crashes, all correlations spike to 1.0 — everything drops together.
How dMoERA Uses Correlation
Greedy de-correlation: when adding a bot to the ensemble, reject if correlation with any existing bot exceeds 0.7. This ensures a diversified portfolio.
Frequently Asked Questions
- What is a correlation matrix?
- Shows how closely assets move together. -1 to +1. For diversification, you want low correlation.
- Why does BTC-ETH correlation matter?
- BTC-ETH is 0.7-0.9. Holding both provides little diversification — when BTC drops, ETH usually drops too.
- What is a diversification score?
- Measures how well assets diversify each other. Based on average pairwise correlation — lower is better.
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