The correlation between crypto and stocks, has been declining since late 2022, with the 90-day correlation coefficient of bitcoin and the S&P 500 currently reaching 0.38 – the lowest level since June 2022, Coin Metrics’ data showed.
The correlation coefficient is a statistical measure that quantifies the strength and direction of the relationship between two variables. It ranges from -1 to +1, where a coefficient of -1 indicates a perfect negative correlation, a coefficient of 0 indicates no correlation, and a coefficient of +1 indicates a perfect positive correlation.
A positive correlation coefficient indicates that as one variable increases, the other variable also tends to increase, and vice versa.
A correlation coefficient of 0.38 suggests that as one variable increases, the other variable tends to increase as well, but not to a large extent. It also indicates that the relationship between the variables is not strong enough to make precise predictions about one variable based on the other.
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