New research shows Ethereum’s ether, the largest altcoin by market capitalization, was the most correlated asset in the cryptocurrency space last year.

According to a report published by the research arm of major cryptocurrency exchange Binance, ETH had an average correlation coefficient of 0.69, out of a total of 20 leading cryptocurrency the report went into.

It notes that assets with a correlation of over 0.5 are considered to have a strong positive association, while those with a correlation of -0.5 are considered to have a strong negative association. A close-to-zero correlation shows there’s a lack of a “lack of linear relationship between two variables, and for this analysis, the returns of two assets.”

Essentially, a positive correlation implies two assets tend to move in the same direction, and investing in them could mean the investors is being exposed to similar risks. A negative correlation, on the other hand, means one asset can, in theory, be used to hedge against the other.

The report reads:

Ether (ETH) is the highest correlated asset. With an average correlation coefficient of 0.69 throughout 2019, it is consistently among the most correlated assets. The coefficient started at 0.69 in Q1 and rose to 0.72 in Q4 (Q2: 0.65; Q3: 0.74).

Out of all the top cryptocurrencies, Tezos (XTZ) was proven to be the least correlated asset, with a median correlation coefficient of 0.3. In general, blockchains with smart contracts and decentralized applications – like that of NEO, EOS, and ETH – had higher correlations with each other.

Other cryptocurrencies that have shown a high correlation with the rest of the market include Binance’s BNB token, XRP, LTC, EOS, and ADA. Other cryptos with a low correlation to the rest of the market were ATOM and LINK. Overall, the report notes the median correlation between top cryptos slightly dropped in Q4 2019.

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