$ qubo learn portfolio/02

Correlation: are you really diversified?

Correlation measures how two assets move together, from −1 (opposite) through 0 (unrelated) to +1 (identical direction). It is computed on returns over a chosen period.

Many crypto assets have high correlation with bitcoin, often above 0.7. A portfolio of ten tokens can therefore behave much like a single, more volatile position.

Correlations are not stable. They tend to rise in stress, when investors sell broadly, exactly when diversification would matter most.

Checking how your positions moved on the market’s worst recent days is a simple, practical test of diversification.

// rule to remember

// your turn

Look at the worst day of the last month for BTC and check how each of your positions moved that day.

Educational content only. Not investment advice. Past data does not predict future results. Risk disclosure