Description
Correlations Stocks Indicator
Overview: The “Correlations Stocks” indicator is a financial analysis tool designed for the TradingView platform. This indicator calculates and visualizes the correlation, covariance, beta coefficient, and return on equity (ROE) of a selected financial instrument with respect to multiple reference markets. The presented source code is subject to the Mozilla Public License 2.0.
Key Features:
- User Input:
- Adjustable lookback period and data source (e.g., close price).
- Selection of up to 12 reference markets (e.g., stock indices, commodities, cryptocurrencies).
- Calculation Core:
- Computes the percentage change of the current market and reference markets.
- Utilizes arrays to store and analyze historical data.
- Calculates lowest and highest returns, mean returns, and standard deviations.
- Correlation and Beta:
- Determines the correlation and covariance between the current market and each reference market.
- Computes the beta coefficient, representing the sensitivity of the current market’s returns to changes in the reference market.
- Table Presentation:
- Displays a customizable table in the top-right corner of the TradingView chart.
- Columns include Ticker, Correlations, Covariance, Beta, and Return on Equity (ROE).
- Color-Coded Visualization:
- Correlation values are color-coded for quick interpretation.
- Beta values are categorized with distinct colors indicating strength.
Usage: Traders and analysts can use this indicator to identify potential relationships between the chosen market and various reference markets. The color-coded table facilitates a quick overview of correlation strength and beta coefficients, aiding in decision-making processes.
Note:
- The indicator assumes a lookback period for historical analysis.
- Correlation values above 0.85 are considered strong positive correlations, while values below 0.5 indicate weaker correlations.
- Beta coefficients above 2 suggest high sensitivity, between 1.3 and 2 suggest moderate sensitivity, and below 0.7 suggest low sensitivity.
Disclaimer: This indicator is a tool for financial analysis and does not guarantee specific trading outcomes. Users should apply their judgment and consider additional factors when making financial decisions.
Credits: © rodopacapital – Source code subject to Mozilla Public License 2.0.