OPEN-SOURCE SCRIPT
Multi-Period Correlation
Description:
The “Correlation Coefficient - Multi Periods” indicator allows you to analyze the correlation between the price of the chart’s asset and another specified asset across multiple time periods simultaneously. It provides a visual representation of how closely the two assets move in relation to each other over user-defined lengths, helping traders and analysts identify relationships, diversification opportunities, and potential hedging strategies.
Features:
• Multi-Period Correlation: Input multiple periods (e.g., 20, 50, 100) to see correlations across different timeframes on the same chart.
• Customizable Asset: Choose any symbol to compare against the current asset.
• Dynamic Visualization: Each correlation is plotted with a unique color for easy distinction.
• Validation: Warns the user if invalid inputs are provided for the lengths, ensuring accuracy.
• Reference Lines: Horizontal lines at 1, 0, and -1 for quick interpretation:
• 1: Perfect positive correlation.
• 0: No correlation.
• -1: Perfect negative correlation.
Use Cases:
• Portfolio Analysis: Evaluate how an asset correlates with another to assess diversification.
• Market Analysis: Identify trends and relationships between stocks, indices, or other financial instruments.
• Risk Management: Understand correlation to optimize hedging strategies and reduce portfolio risk.
This indicator is ideal for traders and investors seeking to make informed decisions by understanding inter-market relationships and their dynamics over time.
The “Correlation Coefficient - Multi Periods” indicator allows you to analyze the correlation between the price of the chart’s asset and another specified asset across multiple time periods simultaneously. It provides a visual representation of how closely the two assets move in relation to each other over user-defined lengths, helping traders and analysts identify relationships, diversification opportunities, and potential hedging strategies.
Features:
• Multi-Period Correlation: Input multiple periods (e.g., 20, 50, 100) to see correlations across different timeframes on the same chart.
• Customizable Asset: Choose any symbol to compare against the current asset.
• Dynamic Visualization: Each correlation is plotted with a unique color for easy distinction.
• Validation: Warns the user if invalid inputs are provided for the lengths, ensuring accuracy.
• Reference Lines: Horizontal lines at 1, 0, and -1 for quick interpretation:
• 1: Perfect positive correlation.
• 0: No correlation.
• -1: Perfect negative correlation.
Use Cases:
• Portfolio Analysis: Evaluate how an asset correlates with another to assess diversification.
• Market Analysis: Identify trends and relationships between stocks, indices, or other financial instruments.
• Risk Management: Understand correlation to optimize hedging strategies and reduce portfolio risk.
This indicator is ideal for traders and investors seeking to make informed decisions by understanding inter-market relationships and their dynamics over time.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.