Workshop Tutorial: Bitcoin Prediction, Backtesting, Correlation Analysis & Causation Studies
Market Correlation Analysis - Bitcoin, Gold, NASDAQ & 10Y Treasury
This analysis examines the correlations between Bitcoin (BTC-USD), Gold (GC=F), NASDAQ (^IXIC), and 10-Year U.S. Treasury Yield (^TNX) over the selected time period. Correlation values range from -1 to +1, where +1 indicates perfect positive correlation and -1 indicates perfect negative correlation.
Shows the correlation strength between different assets over the selected time period. Values range from -1 (negative correlation) to +1 (perfect positive correlation).
Logarithmic Scale: All assets shown as normalized indices starting at 100. Equal visual distances represent equal percentage changes, ideal for comparing relative performance.
Assets move together in the same direction
Assets tend to move together, but not always
Little to no predictable relationship
Assets tend to move in opposite directions
Assets consistently move in opposite directions
Traditional View: Both considered "digital" and "physical" stores of value, respectively. During market stress, they might move together as investors seek alternatives to traditional assets.
Key Insight: Positive correlation suggests Bitcoin is increasingly viewed as "digital gold" by institutional investors.
Risk-On Relationship: NASDAQ represents growth/tech stocks. High correlation suggests Bitcoin trades like a risk asset rather than a safe haven.
Key Insight: Strong positive correlation indicates Bitcoin follows tech stock sentiment and risk appetite.
Interest Rate Sensitivity: Treasury yields reflect interest rates and inflation expectations. Negative correlation suggests Bitcoin falls when rates rise.
Key Insight: Bitcoin's correlation with bonds reveals its sensitivity to monetary policy and inflation hedging narrative.
Classic Inverse Relationship: Gold typically falls when real yields rise, as it doesn't pay interest.
Key Insight: This relationship is fundamental to understanding precious metals as inflation hedges.
Reflects recent market sentiment, news events, and technical trading patterns. Correlations can be volatile and influenced by temporary factors.
Captures business cycle effects, quarterly earnings, and policy changes. More stable than short-term but still subject to market cycles.
Reveals fundamental economic relationships and structural trends. Most reliable for understanding true asset class behavior.
Low or negative correlations indicate better diversification benefits. Assets with correlations below 0.3 provide meaningful portfolio risk reduction.
High correlations (>0.7) suggest assets will likely fall together during market stress, reducing hedging effectiveness.
Changing correlations signal shifts in market structure. Increasing Bitcoin-stock correlation suggests mainstream adoption but reduced diversification benefits.
Treasury yield correlations reveal how assets respond to interest rate changes and inflation expectations. Critical for monetary policy positioning.
Past Performance: Historical correlations do not guarantee future relationships. Market dynamics evolve, especially in emerging asset classes like Bitcoin.
Market Stress: Correlations often increase during crisis periods as all risk assets tend to decline together, reducing diversification when it's needed most.
Data Limitations: Correlation analysis assumes linear relationships and may miss complex, non-linear dependencies between assets.
Educational Purpose: This analysis is for educational purposes only and should not be considered investment advice. Always consult qualified financial professionals for investment decisions.
This analysis examines short-term price correlations between Bitcoin (BTC-USD), Gold (GC=F), NASDAQ (^IXIC), and 10-Year Treasury Yield (^TNX) over prediction timeframes. Real-time data with 15-minute frequency for the most current market relationships.
Short-term analysis is fixed to 24-hour period for optimal correlation accuracy.
Shows the correlation strength between different assets over the selected short-term period. Values range from -1 (negative correlation) to +1 (perfect positive correlation).