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I haven't used correlation that much, but I know that most traders use it
for portfolio and indicator diversification. The theory is that you don't
want to use indicators or securities with a high correlation as if one
indicator goes wrong, they all go wrong, or if one security tanks, they all
tank. The other use is statistical analysis, since any good statistics book
mentions correlation and the theory behind it. I was thinking of using it
for that type of analysis a while ago, but haven't done anything yet. Some
day....
-- Wyatt
-----Original Message-----
From: c [mailto:camacazi@xxxxxxxxxxx]
Sent: Thursday, April 08, 2004 9:27 PM
To: omega-list@xxxxxxxxxx
Subject: correlation mission
Hi all
My new thing this week is correlation. TS has this correlation formula that
goes something like this
corelation(close of data1,close of data2,num of days)...and it returns a
value between -1 and 1 which is intrepreted as close to 1 is correlated ,
close to -1 as inversly correlated etc... I was thinking of using it in my
stuff , and i was wondering what other people are using it for? any cool
holy grail suggestions ? any integrating it with other indicators ie moving
averages maybe? :o)
Cheers
Cameron
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