🔗 How to Use the Token Metrics Correlation Page

Smarter Diversification Starts with Understanding Correlation

The Correlation Page on Token Metrics is a powerful yet often overlooked tool that helps traders and investors understand how assets interact with each other. Whether you're managing a crypto portfolio or building an automated strategy, knowing correlation is key to proper risk management and diversification.

Let’s break it down 👇

‍

🎥 Want to See It in Action?

Check out our quick explainer: How To Leverage Correlation (YouTube Video)

‍

📊 What Is Correlation?

Correlation shows how two assets move relative to one another:

• Do they rise and fall together?
• Move in opposite directions?
• Or behave completely independently?

Token Metrics visualizes this relationship with easy-to-read correlation scores and charts.

‍

🟢 Section 1: What is Positive Correlation?

A positive correlation means both assets tend to move in the same direction.

✅ Example: If Asset A goes up, Asset B is likely to go up too.

This is useful when you're confident in a trend and want to amplify your exposure — but it also increases risk if the market moves against you.

‍

🔴 Section 2: What is Negative Correlation?

A negative correlation means two assets move in opposite directions.

🔄 If Asset A drops, Asset B tends to rise.

Negative correlation is great for hedging. When one asset struggles, the other may offset the loss, making your portfolio more resilient.

‍

⚪ Section 3: Zero Correlation Explained

When the correlation value is close to zero, it means:

• There’s no consistent relationship between the assets.
• Their prices are not statistically linked.

This can be beneficial for true diversification, but you’ll need to assess each asset on its individual merit.

‍

📉 Section 4: Understanding the Correlation Scale

Correlation scores range between -1.0 and +1.0:

Correlation ValueWhat It Means+1.0Perfect Positive Correlation0.0No Correlation (Independent Assets)-1.0Perfect Negative Correlation

Use this scale to identify assets that align with your risk profile and strategy.

‍

🧠 Section 5: Why Correlation Matters in Portfolio Allocation

When constructing a portfolio, your goal isn’t just to pick winners — it’s to manage risk and avoid overexposure.

The best portfolios often include a mix of assets with low or negative correlation.

Benefits of using correlation in portfolio planning:

• Smoother returns over time
• Reduced volatility during market downturns
• Increased likelihood of having a winning asset in any market condition

💡 Pro tip: Aim for a portfolio correlation average close to 0, to get the most balanced exposure.

‍

📸 See It for Yourself

📈 Highest Correlation Screenshot — Shows top assets moving in tandem
📉 Lowest Correlation Screenshot — Highlights assets with opposite or no relationship

Use this page to discover unique pairings, hidden hedges, and build smarter strategies.

‍

✅ Conclusion

Understanding and using the Token Metrics Correlation Page is essential for anyone serious about crypto investing or trading.

It’s more than just numbers — it’s your edge in:

• Smarter diversification
• Better portfolio balance
• Risk-aware trading decisions

Explore the correlation tools on your Token Metrics dashboard today and start optimizing like a pro.