This is a simple script to visualize how two symbols move in relation to each other. For example if the underlying symbol is a 2x Gold (meaning the ticker moves at 2x the spot price of gold---if gold goes up 3% this ticker should go up 6%) and the comparison symbol is an 2x inverse gold (at gold up 3% this should move down 6%). If these ETFs were 100% accurate at tracking the price of gold then this tool would report a value of zero at all times.
Ticker - $10
Comparison - $10
Ticker - $12
Comp - $11
This tool value - |20%| + -|10%| = 10%
It uses a short to smooth things out a bit (see inputs). It is important to keep your axis scale in mind when using this! Two symbols that are always near zero mean they are offsetting each other very well but the value displayed might range from 0 to 0.005, but the graphed area can make it look extreme if autoscaled.
This is a tool with very specific uses: comparing how one digital currency moves in relation to bitcoin's price, comparing how gold moves in relation to silver , etc.
indicator now uses Pine's correlation built-in function. Very simple script at this point. When area drawing tracks negative there is an inverse correlatin between the underlying symbol and symbol being compared. Area between 0 and 1 indicates compared symbol moves in same direction.
Uses Pearson correlation. Going forward this script may be updated to use Spearman correlation or other ranked correlation measure; used either by itself or as part of a weighted indicator that is a combination (i.e. r^2, Spearman, and price elasticity together)
Higher moving average vals are better for shorter time intervals (>20 seems more appropriate for time views <1 hour)
Script is very basic at this point, take with a grain of salt.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.