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Correlation Confluence Trend Indicator

[u]Correlation Confluence Trend Indicator[/u]
Overview
The Correlation Confluence Trend Indicator combines exponential moving averages (EMAs) and statistical correlation measures to identify high-confidence trend alignments between an asset and a benchmark. By filtering signals through correlation strength, this indicator highlights opportunities when the asset and benchmark move together. In other words, it defines a trend and then uses correlation strength and the trend of a second asset to identify high-confidence trends.
Key Features
Inputs
Notes
This indicator is primarily designed for trend-following strategies. By combining trend analysis and correlation filtering, it ensures that signals occur during aligned market conditions, reducing false signals.
Before incorporating this indicator into your trading strategy:
Overview
The Correlation Confluence Trend Indicator combines exponential moving averages (EMAs) and statistical correlation measures to identify high-confidence trend alignments between an asset and a benchmark. By filtering signals through correlation strength, this indicator highlights opportunities when the asset and benchmark move together. In other words, it defines a trend and then uses correlation strength and the trend of a second asset to identify high-confidence trends.
Key Features
- Dual EMA Trend Analysis:
Calculates fast and slow EMAs for both the asset and the selected benchmark (e.g., SPY) to identify bullish and bearish trends. - Correlation Strength Filtering:
Evaluates correlation between the asset and benchmark, identifying stronger-than-average relationships based on the mean and standard deviation. - Background Color Coding:
- Green: Strong correlation, both asset and benchmark bullish.
- Aqua: Weak correlation, both asset and benchmark bullish.
- Red: Strong correlation, both asset and benchmark bearish.
- Fuchsia: Weak correlation, both asset and benchmark bearish.
- Orange: Strong correlation, benchmark bullish, asset bearish.
- Yellow: Weak correlation, benchmark bullish, asset bearish.
- Purple: Strong correlation, benchmark bearish, asset bullish.
- Lime: Weak correlation, benchmark bearish, asset bullish. - Visual Trend Indicators:
Plots fast and slow EMAs for the asset, dynamically colored based on aggregate trend signals. The color of this corresponds to the main trend signal.
Inputs
- Benchmark Symbol: Symbol of the benchmark asset to compare against.
- Fast EMA Length: Period for the fast EMA calculation.
- Slow EMA Length: Period for the slow EMA calculation.
- Correlation Length: Number of bars for correlation calculation.
- Correlation Mean Length: Number of bars for mean and standard deviation calculation.
- Std Dev Multiplier: Multiplier for standard deviation to define correlation strength. When the correlation is Std Dev Multiplier standard deviations above the mean, it counts as a strong correlation.
- Set Background Color: Toggle background coloring on or off.
Notes
This indicator is primarily designed for trend-following strategies. By combining trend analysis and correlation filtering, it ensures that signals occur during aligned market conditions, reducing false signals.
Before incorporating this indicator into your trading strategy:
- Always backtest on historical data to evaluate its performance before committing capital.
- Use proper risk management to control position sizes and mitigate potential losses.
- Remember that no indicator guarantees success. I'm quite proud of this one, but it's not the holy grail.
開源腳本
本著TradingView的真正精神,此腳本的創建者將其開源,以便交易者可以查看和驗證其功能。向作者致敬!雖然您可以免費使用它,但請記住,重新發佈程式碼必須遵守我們的網站規則。
免責聲明
這些資訊和出版物並不意味著也不構成TradingView提供或認可的金融、投資、交易或其他類型的意見或建議。請在使用條款閱讀更多資訊。
開源腳本
本著TradingView的真正精神,此腳本的創建者將其開源,以便交易者可以查看和驗證其功能。向作者致敬!雖然您可以免費使用它,但請記住,重新發佈程式碼必須遵守我們的網站規則。
免責聲明
這些資訊和出版物並不意味著也不構成TradingView提供或認可的金融、投資、交易或其他類型的意見或建議。請在使用條款閱讀更多資訊。