Historical Correlation

Historical Correlation tracks the correlation coefficient (the −1 to +1 measure of how faithfully two assets move in step) for up to 10 user-defined ticker pairs, starting from an anchor point you confirm by clicking a bar or picking a date in the settings. Two displays cover the two questions traders ask: LINES mode plots each pair's coefficient evolving through time, while HEATMAP mode renders the most recent values as a color-graded snapshot.

How to Trade the Historical Correlation?

• Readings near +1: the pair moves in sync. Divergences between two tightly correlated assets are the raw material of pair trading.
• Readings near −1: the pair moves inversely, which is what a hedge is made of: long one, and the other tends to offset it.
• Readings near 0: independent movement, the property diversification depends on, and a warning when two supposedly different holdings sit near +1 instead.

Sector rotation work benefits from the same data, since watching how sector and market-wide correlations shift can reveal which groups are decoupling. The anchored design matters here: relationships drift, and the tool shows exactly how they have evolved since the point in time you care about.

Historical Correlation Settings

• Anchor Point: the bar the calculation starts from.
• Anchor Period: NONE, HOURLY, DAILY, WEEKLY, MONTHLY, QUARTERLY, or YEARLY. With NONE the calculation never resets; any other choice restarts it at each new period's first bar.
• Ticker Pairs (1-10): choose each pair, toggle its visibility, and color-code it.
• Drawing Mode: LINES for historical plots, HEATMAP for the current snapshot.

Frequently Asked Questions

Why do the correlation values restart partway through the chart?

How many assets can I compare at once?

Do I need a subscription to use it?