Correlation Coefficient Colored Candles
This script utilizes Tradingview's built in Correlation Coefficient indicator to calculate the correlation coefficient between two assets and changes candle colors based on the related data.
Info From Correlation Coefficient Indicator:
Correlation Coefficient (CC) is used in statistics to measure the correlation between two sets of data. In the trading world, the data sets would be stocks, etf's or any other financial instrument. The correlation between two financial instruments, simply put, is the degree in which they are related. Correlation is based on a scale of 1 to -1. The closer the Correlation Coefficient is to 1, the higher their positive correlation. The instruments will move up and down together. The higher the Correlation efficient is to -1, the more they move in opposite directions. A value at 0 indicates that there is no correlation.
This indicator allows for choosing the correlated asset, between direct and inverse correlation, the length of the series, and the correlation factor that will trigger the candles to change colors.
Example 1: You choose Direct correlation with a factor of 0.75, the candles that fall below that correlation factor will paint in your desired colors based on their closing price (up or down).
Example 2: You choose Inverse correlation with a factor of -0.75, the candles that rise above that correlation factor will paint in your desired colors based on their closing price (up or down).
Chart Shows Direct correlation of DXY and US10Y with length 3 and correlation factor of 0.75
Info From Correlation Coefficient Indicator:
Correlation Coefficient (CC) is used in statistics to measure the correlation between two sets of data. In the trading world, the data sets would be stocks, etf's or any other financial instrument. The correlation between two financial instruments, simply put, is the degree in which they are related. Correlation is based on a scale of 1 to -1. The closer the Correlation Coefficient is to 1, the higher their positive correlation. The instruments will move up and down together. The higher the Correlation efficient is to -1, the more they move in opposite directions. A value at 0 indicates that there is no correlation.
This indicator allows for choosing the correlated asset, between direct and inverse correlation, the length of the series, and the correlation factor that will trigger the candles to change colors.
Example 1: You choose Direct correlation with a factor of 0.75, the candles that fall below that correlation factor will paint in your desired colors based on their closing price (up or down).
Example 2: You choose Inverse correlation with a factor of -0.75, the candles that rise above that correlation factor will paint in your desired colors based on their closing price (up or down).
Chart Shows Direct correlation of DXY and US10Y with length 3 and correlation factor of 0.75
Release Notes:
Updated to set min and max values for correlation factor, and added a step value.
*** Example 3: NQ and DXY, Inverse Correlation, Factor 0.5. Candles will color when NQ price movement is correlated with DXY; instead of being inverse.
Length
The time period to be used in calculating the correlation.
*** Example 3: NQ and DXY, Inverse Correlation, Factor 0.5. Candles will color when NQ price movement is correlated with DXY; instead of being inverse.
Length
The time period to be used in calculating the correlation.