Charting the Correlation between Two Asset Classes (video)


StockCharts users can chart the correlation between two asset classes using the Correlation Coefficient indicator. This tells us the degree of correlation between two symbols. A positive Correlation means the two move in the same direction, while a negative Correlation Coefficient means they move in opposite directions. The video is at the bottom of the article. 

The Correlation Coefficient can be added as an indicator and placed above or below the main chart window. Note that chartists can use the "Advanced Options" to add an indicator to the Correlation Coefficient, such as a moving average. In the example above, 12-month exponential moving average was added to smooth out the fluctuations in the indicator.  

Chartists can also place both symbol plots in the main chart window to directly compare price movements. The example below shows Spot Gold ($GOLD) and the Dollar Index ($USD) in the main window with the Correlation Coefficient ($USD,$GOLD) in the indicator window. A second symbol can be added to the main window by choosing "Price" as the indicator, entering the symbol and placing it "Behind Price".

Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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