Data shows high levels of correlation between Bitcoin and Ethereum

Investopedia defines the term correlation as a statistic that measures the degree to which two assets move in relation to each other.

Assets with a correlation above 0.5 have a strong positive linear relationship.

Conversely, assets with a correlation below -0.5 are considered to have a strong negative association.

If the correlation coefficient is 0, this implies that there is no observable linear relationship between the two assets.

Skew, one of the leading data analytics provider in the industry, revealed that Bitcoin and Ethereum entered a high "Correlation regime" since 2018.

Throughout 2019, Ether maintained an average correlation coefficient of 0.69, according to a Binance report.

During the first quarter of that year, the coefficient was 0.69 and dropped to 0.65 points in Q2. However, Q3 saw the correlation coefficient between ETH and BTC rise to 0.74.

Over the fourth quarter, these assets displayed a correlation coefficient of 0.86.

Under this premise, the high level of correlation between Ether and Bitcoin does not make them ideal to have in the same portfolio.

According to Binance, the lowest correlated asset is Cosmos with a median annual correlation coefficient of 0.31, followed by Chainlink and Tezos with coefficients of 0.32 and 0.4, respectively.