Calculating Correlation
Here’s how to compute the relationship between two stocks without having to leave home.
Market correlation helps traders understand the relationship between two stocks or indexes. A table filled with information on the subject (below) should help explain the phenomenon.
Traders can use readily available data to calculate the correlation of any combination. For a better understanding of the process, Luckbox invites readers to watch a video on the calculation. (Click here for access to the video.)
The video explains the steps for creating calculations for the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ). Try it with any combination of stocks.
