Weekly Toilet Thoughts: How Ethereum is Correlated to the Stock Market

Some may wonder about why correlation matters to investing. Here is a quick knowledge base of how Ethereum is correlated to the stock market.


In my years of investing, one of the most powerful things I have learned is ‘correlation’. If you set a portfolio right using this phenomenon you will considerably bring down your risk profile.

What does it mean?

Correlation begins with the simple concept of everything in the world being measured against 1. The closer the value to 1 the more correlated the asset classes are.

For example, the stock market and Ethereum are negatively correlated so they are good for a portfolio. As one goes down, it doesn’t mean that the latter has to go down.

We saw this take affect already this week when the S&P 500 was down 1.45% and Ethereum was actually up a little bit. Here is a side by side comparison of the charts.

ethereum correlation to stock market

ethereum correlation to stock market

Now the way I play my portfolio is to have the money my company gives me go into the stock market while the rest goes into crypto.

I have a strong belief in the the idea of playing undervalued markets and crypto seems to be in its beginning stages still from a valuation perspective.

It will only be a matter of time before more whales of the industry start to get an itch for crypto. The price valuation will go up over time because more people will be using the network as it moves toward mass adoption.

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