📊 Correlation Calculator
Analyze the relationship between different assets to optimize your portfolio diversification. Calculate correlation coefficients to understand how assets move together and manage risk effectively. Perfect for traders using our position size calculator and risk management tools.
Calculate Asset Correlation
Enter price data for two assets to analyze their correlation
Correlation Analysis Results
Understanding Correlation Analysis
What is Correlation?
Correlation measures the statistical relationship between two assets. It ranges from -1 to +1, indicating how closely the prices move together over time.
Correlation Ranges
+0.7 to +1: Strong positive correlation
+0.3 to +0.7: Moderate positive correlation
-0.3 to +0.3: Weak correlation
-0.7 to -0.3: Moderate negative correlation
-1 to -0.7: Strong negative correlation
Portfolio Applications
Use correlation analysis for diversification. Assets with low correlation (close to 0) or negative correlation help reduce portfolio risk by not moving in the same direction.
Important Notes
Correlations can change over time, especially during market stress. Regular analysis is important. Also, correlation doesn't imply causation - it only measures co-movement.
How to Use the Correlation Calculator
Enter Asset Names
Input the names or symbols of the two assets you want to analyze. This helps identify your analysis results.
Input Price Data
Enter historical price data for both assets. Use the same time periods for accurate correlation analysis. You can use sample data to test the calculator.
Calculate & Interpret
Click calculate to get the correlation coefficient. Review the interpretation to understand the relationship strength and portfolio implications.
Frequently Asked Questions
What is correlation in trading?
Correlation measures how closely two assets move together. A correlation of +1 means perfect positive correlation, -1 means perfect negative correlation, and 0 means no correlation. This helps traders understand portfolio diversification and risk.
How do you interpret correlation coefficients?
Correlation ranges from -1 to +1. Values above 0.7 indicate strong positive correlation, 0.3-0.7 moderate correlation, -0.3 to 0.3 weak correlation, and below -0.7 strong negative correlation. Higher absolute values mean stronger relationships.
Why is correlation important for portfolio management?
Understanding correlations helps build diversified portfolios. Assets with low or negative correlations can reduce overall portfolio risk since they don't move in the same direction simultaneously.
How much historical data do I need?
Generally, at least 30 data points are recommended for reliable correlation analysis. More data points (50-100+) provide more robust results, but ensure the time period is relevant to current market conditions.
Ready to Optimize Your Portfolio?
Correlation analysis is just the beginning. Combine with our position sizing, risk management, and pip value calculators, then take your trading to the next level with our AI-powered Infinity Algo indicator for advanced market analysis.