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PZ Correlation

In the world of finance, correlation is a statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management. PZ Correlation indicator measures how different securities move in relation to a reference one, thus making portfolio management easier.

  • Avoid concurrent trades in highly correlated instruments
  • Find trading opportunities among highly correlated instruments
  • Correlation is positive when two securities rise in price together
  • Correlation is negative when one security increases and the other decreases

The correlation between two securities is measured by a correlation coefficient.

  • A coefficient of zero is neutral correlation
  • A coefficient of 0.3 is low positive correlation
  • A coefficient over 0.8 is high positive correlation
  • A coefficient of -0.3 is low negative correlation
  • A coefficient over -0.8 is high negative correlation


Author

Arturo López Pérez, private investor and speculator, software engineer and founder of Point Zero Trading Solutions.

ThaiTrader7
164
2014.08.23 20:25 
 

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Jeremy Scott
8483
2014.07.25 10:49 
 

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