The FX AlgoTrader XL Series real-time correlation indicator provides an entry level yet comprehensive indicator for tracking correlation data over multiple chart timeframes for forex and other asset classes. The indicator can track up to 26 forex pairs and also has a trader defined option to track an additional 5 MT4 quoted assets. This allows the trader to be able to examine correlation data between differnet asset classes as well as correlation data within the same asset class.
Correlation, is the statistical measurement of the relationship between two assets. The Pearson correlation coefficient ranges between -1 and +1. Therefore, a correlation of +1 means the two assets move in the same direction 100% of the time whearas a correlation of -1 means the two assets move in opposite directions 100% of the time. A correlation of zero indicates there is no correlation between the two assets ie their prices move in completely unconnected ways in relationship to each other.
Sentiment and global economic factors are very dynamic and can change very quickly. It's important to look at the longer term correlations to gain a clearer perspective relationship between the two currency pairs. Correlations change for a variety of reasons, the most common of which include diverging monetary policies, a certain assets's sensitivity to commodity prices, as well as unique economic and political factors.
Correlation is particularly of interest to arbitrage traders looking for situations where the correlation between two normally highly correlated assets breaks down. Such situations can create an opportunity to simultaneously buy and sell each asset. Typically an arb trader analyses the 'spread' between the assets which is effectively the difference between the two asset prices. If one asset price moves up in relation to the other the trader would look to sell the higher priced asset and buy the lower priced asset on the basis the two assets prices come into line or revert to the mean at some point in the future.
Provides correlation data for up to 26 forex pairs1
Trader's can define up to 5 additional trader defined assets for tracking (can be any MT4 quoted asset on the platform)
Positive and Negative Correlation Thresholds allow traders to filter correlation values easily and group them by colour
Granular control over all display options including text size and colours with custom spacing options
Correlation calculation update/refresh frequency can be tailored to minimise system load and trader requirements
1 Pair allocation cannot be changed unlike the Pro Series version which is completely trader configurable in terms of asset tracking
60 Minute Correlation Data for 26 Forex Pairs, the FTSE 100 and 3 leading crypto pairs - smalled font option
60 Minute Correlation Data for FX Majors + leading crypto + FTSE 100 - Largest font option
Daily Correlation Data for FX Majors + leading crypto + FTSE 100 - Largest font option
Weekly correlation data for major Indices
External input parameters
External input parameters (continued)