Correlation Matrix

What it means: A table showing how different assets move together (or not), correlation ranges from -1 (opposite directions) to +1 (identical moves).

In plain terms: It’s like checking whether your investments are “friends” or “independent spirits.”

Example: If stocks and bonds have a correlation of -0.5, they tend to move oppositely, good for diversification.

Bonds vs Equities vs Crypto:

• Bonds & Equities: Often mildly correlated.
• Equities & Crypto: Usually strongly correlated in risk-on markets.
• Bonds & Crypto: Rarely close friends, low correlation.

How to use it: Use this matrix when building or rebalancing portfolios. Low or negative correlations mean true diversification. If you notice all your holdings becoming more correlated, your portfolio’s protection against downturns is weakening, time to diversify further.