Ether beta to Bitcoin
How much do Ether's moves tend to exceed Bitcoin's, and how do you check that claim?
In plain words
Beta measures how much one asset's price tends to move when another moves. Ether's beta to Bitcoin above one means Ether typically swings more than Bitcoin in the same direction; below one means less.
Why it matters
A higher beta means a position sized on Bitcoin's moves may be too small or too large for Ether. Beta also assumes the two move together, which can break in a single week.
In a real week: BTC, week of 4 October 2021
In the week of 4 October 2021, BTC rose 13.4% while the ETH-minus-BTC return was -13.5 percentage points, so BTC outperformed ETH by that gap and the larger weekly move was BTC. The ETH/BTC ratio changed -11.91%, and hourly correlation between the two was 0.85, labelled close. Despite that tight average co-movement, the two assets moved in different directions that week.
A common mistake
Treating beta as a fixed multiplier. It is an average relationship measured over many periods and can fail for whole weeks.