Correlation
Degree to which markets move together. High correlation reduces diversification benefit. Essential for portfolio risk.
In Depth
Correlation is a fundamental concept in prediction market trading. In platforms like Polymarket with thousands of active markets, understanding correlation is essential for consistent profitability. TradeSphere data across 5,400+ markets shows that traders who master these concepts significantly outperform those trading on instinct.
In practice, correlation connects to Diversification, Hedging, Variance. PolyPulse tracks these metrics and publishes weekly analysis. For hands-on application, PolyFire provides real-time market data and copy trading via Telegram.
Related Terms
3Diversification
riskSpreading capital across uncorrelated markets. Prevents single bad outcomes from devastating total returns.
Hedging
riskTaking offsetting positions to reduce risk. Buy NO against YES, or trade correlated markets in opposite directions.
Variance
riskHow much returns deviate from average. Binary markets have inherently high per-trade variance.
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