OPEN-SOURCE SCRIPT
Sector Correlation Matrix [LuxAlgo]
The Sector Correlation Matrix indicator provides a quantitative measure of the statistical relationship between a selected asset and a benchmark to help traders identify market synchronization and relative strength.
🔶 USAGE
This tool is particularly useful for relative strength analysis. For example, if a stock is "Decoupled" while the benchmark is crashing, it may indicate idiosyncratic strength. Conversely, traders can use "Strong Positive" states to confirm that a price move is part of a broader market trend rather than an isolated event.
The indicator categorizes market relationships into five distinct states based on the coefficient value:
🔶 DETAILS
The script utilizes the Pearson Correlation Coefficient to calculate the rolling correlation between the current chart's closing price and a user-defined benchmark (such as SPY, QQQ, or BTC). This statistical method measures the linear correlation between two sets of data, resulting in a value between -1 (perfect inverse correlation) and 1 (perfect positive correlation).
The visual output includes a dedicated pane with a correlation oscillator and an on-screen dashboard that provides real-time metrics, allowing for a quick assessment of the current market state without manually comparing multiple charts.
Pine Script®
🔶 SETTINGS
🔹 Logic Settings
🔹 Dashboard
🔶 USAGE
This tool is particularly useful for relative strength analysis. For example, if a stock is "Decoupled" while the benchmark is crashing, it may indicate idiosyncratic strength. Conversely, traders can use "Strong Positive" states to confirm that a price move is part of a broader market trend rather than an isolated event.
The indicator categorizes market relationships into five distinct states based on the coefficient value:
- Strong Positive (> 0.7): High degree of synchronization; the assets move together closely.
- Moderate Positive (> 0.3): General tendency to move in the same direction.
- Decoupled / Neutral (-0.3 to 0.3): No significant linear relationship; the asset is moving independently.
- Moderate Negative (< -0.3): General tendency to move in opposite directions.
- Strong Negative (< -0.7): High degree of inverse synchronization.
🔶 DETAILS
The script utilizes the Pearson Correlation Coefficient to calculate the rolling correlation between the current chart's closing price and a user-defined benchmark (such as SPY, QQQ, or BTC). This statistical method measures the linear correlation between two sets of data, resulting in a value between -1 (perfect inverse correlation) and 1 (perfect positive correlation).
The visual output includes a dedicated pane with a correlation oscillator and an on-screen dashboard that provides real-time metrics, allowing for a quick assessment of the current market state without manually comparing multiple charts.
🔶 SETTINGS
🔹 Logic Settings
- Benchmark Asset: The ticker symbol to compare the current asset against (e.g., SPY, QQQ, BTCUSDT).
- Correlation Length: The lookback period used to calculate the Pearson Correlation Coefficient.
🔹 Dashboard
- Show Dashboard: Enable or disable the on-screen information table.
- Position: Select the dashboard location (Top Right, Bottom Right, or Bottom Left).
- Size: Adjust the size of the dashboard text and cells (Tiny to Huge).
Script open-source
Nello spirito di TradingView, l'autore di questo script lo ha reso open source, in modo che i trader possano esaminarne e verificarne la funzionalità. Complimenti all'autore! Sebbene sia possibile utilizzarlo gratuitamente, ricordiamo che la ripubblicazione del codice è soggetta al nostro Regolamento.
All content & scripts provided by LuxAlgo are for educational purposes only and are not financial advice.
Declinazione di responsabilità
Le informazioni e le pubblicazioni non sono intese come, e non costituiscono, consulenza o raccomandazioni finanziarie, di investimento, di trading o di altro tipo fornite o approvate da TradingView. Per ulteriori informazioni, consultare i Termini di utilizzo.
Script open-source
Nello spirito di TradingView, l'autore di questo script lo ha reso open source, in modo che i trader possano esaminarne e verificarne la funzionalità. Complimenti all'autore! Sebbene sia possibile utilizzarlo gratuitamente, ricordiamo che la ripubblicazione del codice è soggetta al nostro Regolamento.
Declinazione di responsabilità
Le informazioni e le pubblicazioni non sono intese come, e non costituiscono, consulenza o raccomandazioni finanziarie, di investimento, di trading o di altro tipo fornite o approvate da TradingView. Per ulteriori informazioni, consultare i Termini di utilizzo.