Sector Correlation Matrix

Sector Correlation Matrix measures how tightly your charted symbol tracks a benchmark you choose. It computes a rolling Pearson correlation between the two closing-price series and sorts each reading into five plain-language states, so instead of eyeballing two charts side by side you watch one oscillator answer the question: is this asset moving with the market, against it, or on its own?

How to Trade the Sector Correlation Matrix?

• Strong Positive (above 0.7): tight synchronization - a breakout here is more plausibly part of a broader market move than an isolated event.
• Moderate zones (above 0.3 or below -0.3): a general tendency to move together or apart, without lockstep.
• Decoupled (-0.3 to 0.3): no significant linear relationship. An asset holding firm while its benchmark slides is printing relative strength worth investigating.
• Strong Negative (below -0.7): strongly inverse movement - the zone hedgers and defensive positioners care about.

State changes carry information of their own: a symbol drifting from Strong Positive toward Decoupled may be starting an independent trend, and a portfolio whose holdings all read Strong Positive against the same benchmark is closer to one position than several.

Sector Correlation Matrix Settings

• Benchmark Asset: the ticker to compare against - an index proxy, crypto pair, forex pair, or commodity.
• Correlation Length: the rolling lookback; shorter lengths react faster, longer lengths smooth noise.
• Show Dashboard / Position / Size: the on-chart panel with the live correlation value and state, its placement, and its text size.

Frequently Asked Questions

Does it only work on stocks?

How does correlation sharpen trading decisions?

How do I access the Sector Correlation Matrix?