

Correlate Bitcoin prices with anything - pranade
http://www.kimonolabs.com/bitcoin/correlator

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throwaway13qf85
They seem to be computing the correlation of price levels (which are
completely meaningless) rather than the correlation of price difference or
returns.

Any two time series which broadly moved up over the same time period will look
correlated if you compute the correlation of levels. But they could in fact be
completely uncorrelated (and therefore have zero predictive power) when you
compute the correlation on returns, which is what you should be doing.

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xtacy
Neat visualization, but as the website itself notes at the bottom (in fine
print): "Correlation doesn't necessarily mean causation. Be careful when using
correlations to draw causal inferences for trading or research."

Here's another fun tool where you can correlate search activity by drawing an
arbitrary time series:
[https://www.google.com/trends/correlate/draw?p=us](https://www.google.com/trends/correlate/draw?p=us)

~~~
sdgsdgsdg
Why would you need a causal inference to make a trade?

~~~
throwaway13qf85
When you lose money for two weeks straight, it's nice to be able to figure out
if it's a statistical blip, or if there's a fundamental reason that the trade
stopped working. If all you have is a statistical correlation, you can't do
that, and you have to guess. If you have a causal relationship in mind, you
can examine the market to see if there are reasons to believe that the causal
relationship might have broken down.

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swswsw
How about correlation to Hacker News mention of bitcoin?

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pranade
Great idea! Would require a bit of post-processing on the raw data from our
API...

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swswsw
There is a correlation to bitcoin repo on github. Is that the cumulative
number of repo on github with "bitcoin" tag? or is it the activity on
github.com/bitcoin?

Personally, I would think that correlation to the number of bitcoin repo on
github does not make sense because that is the cumulative number. However, if
you can correlate to average recent activities on all bitcoin repo on github,
that could be very interesting. :)

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wodzu
Very interesting. Let's not forget that butter production in Bangladesh and
U.S. cheese production, and sheep population in Bangladesh correlates hightly
(99%) with the movements of the S&P 500.

[http://nerdsonwallstreet.typepad.com/my_weblog/2007/04/stupi...](http://nerdsonwallstreet.typepad.com/my_weblog/2007/04/stupid_data_min.html)

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thisiswrong
This is great, but will only be of use when much more liquidity is bought to
bitcoin. Right now, the Mt Gox and Newsweek debacles are the only things
artificially pushing btc prices below their upwards paths. Why - is something
that remains to be determined. Perhaps someone BIG needs to buy into bitcoin
before the next rally ?

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murbard2
This seems to be correlation of the price level, not correlation of the
returns. It's pretty much a useless metric.

~~~
pranade
Not sure I understand the point... ? The reason for correlating against price
is in hope of finding a leading indicator to movement so that you can better
understand the relationship between bitcoin price and some other metric. This
would in theory help you ultimatly make better returns by better predicting
when to buy or sell...

~~~
throwaway13qf85
Any two time series which move broadly in the same direction will be
'correlated' if you compute the correlation on price levels, whether they have
any predictive power or not.

Correlation on price levels is meaningless, only correlation on price
differences or returns is meaningful.

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ThomPete
If you haven't tried out Kimonolabs already go and try it out. It's so well
done.

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Houshalter
Reminds me of this:
[http://i.imgur.com/gAGjP.png](http://i.imgur.com/gAGjP.png)

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jhanschoo
Correlate a statistic with enough metrics, and you're guaranteed to find a
spurious match sooner or later.

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tonystark
Bloomberg is a dinosaur.

~~~
CamperBob2
Sometimes dinosaurs are awesome, though. See the video of the older
commentator at Bloomberg interviewing the daffy twit at Newsweek who "outed"
Dorian Nakamoto:

[http://www.bloomberg.com/video/did-newsweek-uncover-the-
wron...](http://www.bloomberg.com/video/did-newsweek-uncover-the-wrong-
nakamato-jQlEjzLuQ~6aEKN4NhDgow.html)

One of those rare videos that's worth putting up with a 30-second ad.

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elwell
I think somethings wrong with the Dogecoin stats...

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cjbarber
Pratap and the team, awesome work!

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udit99
anyone know what the charting library is used for the time series graph?

~~~
pranade
Sure thing... its a modified version of nvd3 (nvd3.org) using cmaurer's
awesome angular directives: [https://github.com/cmaurer/angularjs-
nvd3-directives](https://github.com/cmaurer/angularjs-nvd3-directives)

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verroq
As a ponzi scheme built on hype,
[http://www.google.com/trends/explore#q=bitcoin](http://www.google.com/trends/explore#q=bitcoin)
is all you need.

~~~
sirsar
"Ponzi scheme" has a very specific definition (early investors paid by late
investors rather than from profit). While Bitcoin may certainly be in a
bubble, a sharp rise in price does not qualify it as a ponzi any more than
tulip bulbs or AAPL shares.

~~~
verroq
Let's call it a bubble then, since BTC's intrinsic value is somewhere near
zero.

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mitochondrion
The intrinsic value of USD is near zero. Useful in a post-apocalyptic as fire
kindling, and not much else. Its perceived value is powered through the USA's
massive military, political, economic, and financial power. Perhaps Bitcoin
has a perceived value as a mechanism of subversion of such a hegemony.

Or maybe it's just a vehicle of speculation. Either way, no modern currency
has intrinsic value.

~~~
DrStalker
That's why Australia has polymer banknotes, in a post apocalyptic situation
you can combine them in a waterproof patchwork sheet.

