Stocks With the Highest Correlation to Ethereum

Stocks With the Highest Correlation to Ethereum

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Bitcoin (BTC) has been getting a lot of attention of late, recently rallying to record highs of $73,750 in March. For any aspiring technical analysts reading, you may even see that BTC/USD is in the process of forming a Bullish Pennant Pattern. 

Ethereum (ETH) is slowly catching up, rallying and probing the $4,000 mark. The rise in the second-largest cryptocurrency (by market capitalisation) shows not only how strong its blockchain technology is but also how it is becoming more influential on stocks related to the cryptocurrency market.

Ethereum has made a name for itself as something more than just a digital exchange. Through the Shanghai Upgrade, it changed how its blockchain works by switching to a proof-of-stake method. By using Ether users as validators instead of the traditional concept of miners, this system makes the blockchain's infrastructure safer and more reliable, making it appealing to big investors. Not only has this change limited the supply of ETH, but it has also made it very popular, especially among investors who want to add crypto stocks to their portfolios to make them more diverse.

The main reason for Ethereum's recent growth is the influx of capital funding. Institutions have started to shift their assets from Bitcoin to Ethereum, which is not the case in the retail crypto market, which is more focused on Bitcoin. Many believe Ethereum is going to refresh highs, as the market is getting more and more excited about the possibility of ether spot ETF approval by May this year (2024).

How Does Correlation Come into Play?

The correlation between two securities shows how they move in relation to the other. It is often measured by a correlation coefficient ranging from -1 to 1 where a value of 1 means there is a perfect positive correlation (meaning they move in unison perfectly), and a value of -1, means there is a perfect negative correlation (the Pearsons correlation coefficient is most commonly used). A reading of 0, however, means that no linear relationship exists between the two variables. 

It is important to keep in mind that correlation does not mean causation. Just because two assets move at the same time doesn't mean that one moves them. For example, both ice cream sales and shark attacks go up in the summer, but neither causes the other.

Calculating the correlation coefficient involves a somewhat complicated formula. Fortunately, with TradingView, you can apply the correlation coefficient tool and it will visually display the current correlation between your chosen securities currently and in the past. In this case, we’re going to be looking at some of the highest correlations between Ethereum and a handful of stocks.

Top Stocks with High Correlation to Ethereum

Accenture plc (ACN)

Accenture is a world leader in consulting and technology services and has a positive correlation of 0.75 with Ethereum. 

The company has recently made big moves into the Ethereum ecosystem. The business now provides Ethereum-based solutions for companies that want to use blockchain technology to make their operations more efficient, especially when it comes to making payments easier. These solutions take advantage of Ethereum's safe and open platform, which makes transfers easier and improves business operations. Accenture strengthens its place as a leader in closing the gap between standard business processes and blockchain innovations by adding Ethereum to its range of services.

CME Group Inc. (CME)

As one of the biggest names in futures markets, the CME Group has a positive correlation of 0.72 with Ethereum. By providing a wide range of swaps contracts and new financial options connected to cryptocurrencies like Ethereum, the CME Group has become a key link between traditional finance and the growing crypto environment. This not only gives traditional investors more investing choices but also makes cryptocurrency more flexible and easier to trade.

The fact that CME Group is supporting Ethereum, and other digital currencies shows that they are thinking ahead and understanding how cryptocurrencies may change financial markets and business strategies. It shows a dedication to creating a more connected financial system where traditional and digital assets live together and offer buyers a wide range of chances.

HIVE Digital Technologies Ltd. (HIVE)

HIVE Digital Technologies Ltd. boasts a positive correlation of 0.74 with Ethereum and is based in Canada, Sweden, and Iceland. The company specialises in mining and selling digital currencies, especially Ethereum Classic. HIVE stands out because it works directly with the Ethereum environment and all of its versions. As a result of this strategic placement, HIVE is very sensitive to changes in the Ethereum market and benefits from having direct access to its price changes and technological advances. HIVE's role goes beyond just mining cryptocurrencies; it's a deeper look into the workings of blockchain technology and how it could be used to make the digital economy more valuable in the long term.

BlackRock, Inc. (BLK)

With a positive correlation of 0.69 with Ethereum, BlackRock is a giant in the field of investment management. It is now making a big move into the bitcoin world. After entering the spot Bitcoin ETF race, BlackRock's application for a spot in the Ethereum ETF is a big step forward that shows the company is going deeper into cryptocurrencies. This project is a big change that shows BlackRock understands Ethereum's special value in the world of digital assets. If the Ethereum ETF goes through, it will not only give more ways for regular investors to interact with digital currencies, but it will also be a huge step towards including cryptocurrencies in regular people's investment accounts.

PayPal Holdings, Inc. (PYPL)

Paypal has a positive correlation of 0.79. Its platform supports the buying, holding, and selling of cryptocurrency, including Bitcoin, Ethereum, Bitcoin Cash (BCH), and Litecoin (LTC). Venmo, PayPal's popular mobile app, lets its users trade cryptocurrencies in a similar way. As a major player in digital banking, PayPal's success is closely linked to the cryptocurrency market.