Stocks Correlation

Posted: Oct. 28, 2015, 9:13 p.m. by

When investing, it is often recommended to diversify your portfolio. One of the common ways to diversify is by purchasing stocks with prices that move in opposite directions (if one stock's price increases, the other would decrease). To assess the price relations between stocks, the pros use a correlation formula that can take a lot of work - download the price history of the two stocks, then in Excel (or other tool) calculate the correlations.

Since we aim at providing for everyday investors the same power and tools that the pros use (and actually way more), we are introducing our new and automatic stock correlation feature using 252 days (a year) of stock price movement.

For all subscription levels - in every screen with stock information, you can see a new tab "~Stocks", and it will show you the top 5 most correlated (the top 5 stocks that move in sync with the selected stock) and least correlated (the 5 stocks, which prices move the most in opposite direction to the selected stock):

Correlated Stocks

Another related feature for subscription levels Advanced Investor and above, you can also check your favorites stocks correlation in a matrix. From the profile page, the Correlation matrix displays the correlations between all your favorite stocks - in darker green are the closely correlated stocks, while stocks that move in opposite directions are colored in red and have a negative coefficient of correlation. Light green / yellow correlations are for stocks that do not have a strong correlation between themselves in either direction:

Correlation Matrix