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correlationFREE

Correlation

See how closely a group of tickers move together. Use the matrix to find out whether your watchlist is ten ideas or one, and to pick names that hedge each other.

Correlation measures whether two stocks move in the same direction on the same days. A reading of +1.00 means they move in lockstep, 0 means no link and −1.00 means they move opposite. If every name you hold is above +0.80 against the others, you own one bet in several tickers. Free accounts get up to 5 tickers and the 30D and 90D windows. Pro adds up to 10 tickers and the 180D and 1Y windows.

A correlation matrixA correlation matrix
A correlation matrix

How to build a matrix

  1. Click Correlation in the sidebar.
  2. Type a ticker in the ADD_SYMBOL... box and pick it from the list. Repeat for each name.
  3. Or click + WATCHLIST to load your watchlist, up to your limit.
  4. Click the × on a ticker's chip to remove it.
  5. The matrix appears as soon as you have two tickers. Adding or removing one recalculates it.

The page opens with a starter group of large tech names, or with the first symbols of your watchlist if you have one.

How to change the window

  1. Click 30D, 90D, 180D or 1Y above the matrix.
  2. The matrix recalculates on daily returns over that many calendar days.

Windows with a padlock need Pro. Short windows show how names behave lately. Long windows show how they behave over a full cycle, so check both before you trust a pair.

How to read the matrix

  1. Find your ticker in the row at the left and another ticker in the column across the top. The cell where they meet is their correlation.
  2. The diagonal is always 1.00, because a stock moves with itself.
  3. Green cells move together and red cells move against each other. The deeper the color, the stronger the link. Cells between −0.20 and +0.20 are left blank, meaning little link.
  4. Numbers at or above +0.50 print in green and at or below −0.50 in red.

How to use it

  • Diversify: look for a low or negative number against your biggest holding.
  • Check overlap: a whole row of high greens means those names are the same trade.
  • Spot a break: a pair that is usually high but drops has started to decouple.

Good to know

  • Correlation looks backward and changes with the window. It can jump in a market shock, when many things fall together.
  • It uses daily closing prices, so it says nothing about the moves inside a day.
  • To see the price paths side by side, use Compare.

If something doesn't work

  • No matrix: add at least two tickers.
  • You cannot add another ticker: you reached your limit, 5 on Free and 10 on Pro.
  • A window is locked: 180D and 1Y need Pro. See Pricing.
  • A ticker is missing from the matrix: it has too little price history in that window.