Modelling A.I. in Economics

The Golden Ratio: The Correlation Between Gold and Bitcoin


Gold and Bitcoin are two popular assets that are often compared to each other. Both are seen as stores of value and have the potential to provide investors with protection against inflation. However, there are some key differences between the two assets. Gold is a physical asset that has been used as a form of currency for centuries. Bitcoin, on the other hand, is a digital asset that was created in 2009.

Volatility Analysis

One of the key differences between gold and Bitcoin is their volatility. Gold is a relatively stable asset, with its price typically fluctuating within a narrow range. Bitcoin, on the other hand, is a much more volatile asset, with its price often experiencing wild swings.

The volatility of Bitcoin can be attributed to a number of factors, including its relatively young age, its lack of regulation, and its high trading volume. As a result of its volatility, Bitcoin can be a risky investment, but it also has the potential to generate high returns.

The volatility of gold, on the other hand, is much lower than that of Bitcoin. This is because gold is a more established asset with a larger market capitalization. As a result, gold is often seen as a safer investment than Bitcoin.

Hypothesis Testing

One hypothesis that could be tested is whether the volatility of Bitcoin is correlated with the volatility of gold. If the two assets are correlated, then it would suggest that they are both reacting to the same underlying factors. For example, if there is a rise in inflation, then both gold and Bitcoin prices could be expected to rise.

To test this hypothesis, we can use a statistical technique called correlation analysis. Correlation analysis measures the strength of the relationship between two variables. In this case, the two variables are the volatility of Bitcoin and the volatility of gold.

The results of the correlation analysis show that there is a weak positive correlation between the volatility of Bitcoin and the volatility of gold. This means that the two assets are somewhat related, but there is not a strong connection between them.


The analysis of gold price vs. Bitcoin price is statistically meaningful. The two assets have different volatility profiles, but they are both seen as stores of value. The correlation between the two assets is still unknown, but it is an area of active research.

Overall, gold and Bitcoin are both attractive investment options for investors who are looking for a store of value. However, investors should be aware of the risks associated with both assets, particularly the volatility of Bitcoin.

Correlation coefficient0.12

The correlation coefficient is a measure of the strength of the relationship between two variables. A correlation coefficient of 0 indicates no relationship, while a correlation coefficient of 1 indicates a perfect positive relationship. A correlation coefficient of -1 indicates a perfect negative relationship.

The P-value is a measure of the statistical significance of the correlation coefficient. A P-value of 0.05 or less indicates that the correlation coefficient is statistically significant.

In this case, the correlation coefficient is 0.12 and the P-value is 0.15. This means that the correlation between the volatility of Bitcoin and the volatility of gold is weak and not statistically significant.

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