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Correlation stocks indicator

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Correlations Stocks Indicator

Optimize financial analysis with the ‘Correlations Stocks’ indicator on TradingView. Calculate correlations, covariances, and beta coefficients for selected markets. Color-coded insights and customizable tables aid quick decision-making. Enhance trading strategies with this versatile tool. #Finance #TradingView #StockAnalysis

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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:

  1. 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).
  2. 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.
  3. 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.
  4. 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).
  5. 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.

How to install indicator in Trading View? 

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