MT4 Correlation Indicator

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. 

 

Using Correlation in trading

 

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.

 

Features

 

 

 

Screenshots

 

 

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)

 

Pricing