Price Correlation
With assets move together and which assets tend to move in opposite directions
This bar graph visually represents the correlations between the selected and 20 other assets.
Each bar's height corresponds to the strength of the correlation coefficient, with the positive 10 bars reflecting positive correlations (indicating assets moving in the same direction) and the bottom 10 representing negative** correlations (assets moving in opposite directions). A higher bar signifies a stronger correlation, while a shorter one implies a weaker or negligible relationship. Interpreting this data scientifically, users should primarily focus on the top 10 positively correlated assets for potential trading partnerships or diversification strategies. Conversely, the bottom 10 inversely correlated assets can be explored for hedging or contrarian trading opportunities. Additionally, outliers may signal unique trading prospects or risks.
In summary, this graph offers a concise view of assets' correlation strengths with the target asset, aiding users in making data-driven trading decisions and optimizing their portfolios. You can use the knowledge of which assets are opposite correlations to hedge your position in your portfolio.
In the graph version employing dynamic time warping (DTW), each bar represents a measure of similarity inversely proportional to the cost or distance between the target asset and the 20 other assets. More specifically, each bar's height signifies the similarity's strength, where taller bars represent a higher degree of similarity and shorter bars indicate a lower similarity score.
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